The other day I was strolling through my local shopping mall.I do this from time to time to get a feel for the marketing going on during any particular season (in this case Fall / Winter).I also like to see if I can spot any major shifts or changes happening in certain sectors - such as electronics, clothing, toys, etc.It is a great way to learn new tricks and to see the best of breed in action.
So, as I rounded the corner and stepped on to the downward bound escalator, I caught something in the corner of my eye.I found myself standing backwards staring at a Nokia store.It must have looked quite odd to see me facing backwards going down an escalator with a "what the hell?" expression on my face.Why would an equipment OEM to the big wireless carriers have its own store?
I quickly went back up to the third floor to satisfy my curiosity.As I approached the door, I could see the space was laid out very clean, almost Apple-like.Inside there was a plethora of handsets on display (7 Scrabble points for using the word "plethora").Quite frankly, more than I thought Nokia had in its cache.The only store attendant promptly greeted me as I crossed the threshold.Impressive start.
We proceeded to chat, and I quickly learned something crazy was going on.They did not care about sales.Let me repeat that.They sold nothing at this store.They are "flagship brand stores."
Please pause a moment to let this sink in......(insert the echo of "no sales" deep in your brain).
Apparently, they now have a handful of stores open in the US.They started with the big cities - LA, Chicago, New York.Now they are in my cow town - Washington, DC.They allow customers to see working handsets versus the "dummy" handsets at your local Sprint Nextel or Verizon kiosk.They will refer a customer down to the stores of these various wireless giants if the customer wants to buy a phone and get a wireless plan.
So, I had to ask - how in the heck do they justify these very expensive retail locations?More specifically, I asked the store attendant what metrics they had to report, as well as what they were managed on.The simple reply was, "not much".She went on to explain that basic traffic reports were the key indicator sent back to corporate.
I ask you - what in Albuquerque is going on here?I decided to look for a more official stance.According to a press release on the Nokia Global site, on December 8th, "The first Nokia Flagship store opened today in the prestigious Pushkin Square district of Moscow, Russia. The Nokia Flagship Stores will be opened in high-profile locations in major shopping destinations in the next couple of years."Hmmm.Nice choice for a first location though.I have been to Pushkin.Moscow is an incredibly hip place despite what most people would think.Arbat street just outside Red Square is hot, hot, hot.
The press release goes on to say, "Like Moscow, each Nokia Flagship Store will be located in the very best retail locations in high-traffic urban settings in major markets worldwide. Customer service will be the key driver. The Nokia Flagship Stores will be owned, managed and operated by Nokia to provide the best level of experience, education and inspiration in mobile device retailing.
The Nokia Flagship Stores will form the top end of Nokia's newly revised retail strategy that includes retail and operator partners and their more than 300,000 retail outlets globally. All of these customer outlets will remain essential to Nokia's ongoing success and continue to be the main sales channels in the future. The feedback and learnings received through the Flagship stores will be shared and implemented with Nokia's retail and operator partners."
A-HA!I saw it.The word "sales."It came just after the word "main" and just before the word "channel."Hmmm.I am confused again.I press on to the Nokia USA site.I find the following: "The Nokia Store that just opened in Chicago is the first one in the United States. Over the next two years, Nokia will continue to open additional Nokia Stores in high-profile retail locations in shopping capitals around the world. Each Nokia Store will showcase and sell a broad range of Nokia's mobile devices, enhancements, solutions and services."
There it is again!But now its phrased as "showcase and sell."This is a riddle wrapped in an enigma.I must deduce that the "sell" part is coming later - part of a phased release perhaps once they work out the kinks with their key wireless partners.I can't imagine the integration required for them to sell a dead unit and tell customers to go downstairs to the Verizon booth to activate their phone.Nor can I imagine what a disaster it would be to do it there on site in the Nokia store.But I digress.
On a serious note though, think of the signal that is being sent here.An OEM has decided to open their own stores to ensure that the world knows all that they have to offer.This is like Hewlett Packard opening their own stores.What is driving this you may ask?Too much noise.Too many choices.Poor training of the retail channels of the wireless carriers.Net, Nokia and other manufacturers are finding that there is a point of diminishing returns with respect to growing their handset portfolio.Imagine trying to train a retail employee manning a Verizon store to know the key selling points of each phone from Motorola, Nokia, LG, Samsung, etc.At $15 bucks an hour, that is NOT going to happen.
So, is this the start of a bigger movement?Will we see the wireless carriers pushing their rate plans and networks through the storefronts of the handset OEMs?Who knows.But I can tell you one thing, customers buy the handset first, then find a rate plan that works.The handset is a fashion accessory.It is the tangible item that tells the world "this is who I am."It is the tail that wags the dog.