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November 18, 2005

Consumers Down On Carriers For Cellular Phone Buys

Courtesy of TechWeb News

Consumers are unhappy with buying a cellular phone from carriers, giving higher ratings to retailers, a research firm said Friday.

Only 24 percent of the more than 2,100 consumers surveyed by The NPD Group said buying a mobile phone from a carrier-owned story was an "excellent or good experience." Mass merchants, such as Wal-Mart, and electronic retailers, on the other hand, scored higher levels of satisfaction.

Nextel, which recently merged with Sprint, and Cingular ranked the highest among phone shoppers, while T-Mobile and Sprint were at the bottom, the research firm said. Among retailers, RadioShack and Wal-Mart had the best overall scores, ranking high in helpful sales staff, variety and selection of wireless products, and store layout.

Carriers dominate wireless retail sales, accounting for 68 percent of all phone purchases. Nevertheless, their Achilles' heel is in knowledge and helpfulness of their sales staff, NPD researcher Clint Wheelock said. Only 1 in 4 survey respondents rated carrier-owned stores as "extremely or very good" in this metric.

"It's pretty typical (in the retail industry) to see 60, 70 and 80 percent in this area," Wheelock said. "The fact that they're down in the 20s is a red flag to me. These numbers really quantify that consumers are generally unhappy in the experience of buying a cellular phone."

Despite these problems, Wheelock said he couldn't say for certain that retailers were doing a better job overall. Consumers, for example, could have higher expectations for carriers. In addition, the difference in business practices in the two industries may have played a role.

"There's some unknowns here," Wheelock said.

The study did find that the majority of consumers were repeat phone buyers, with only 14 percent saying they were buying their first handset. More consumers, 39 percent, were upgrading to better phones, while 15 percent were replacing a broken one.

Carriers are not expected to lose their dominance of the wireless retail space, but their poor showing is an indicator that mass merchants like Wal-Mart and electronic stores could grab a bigger piece of the market, The NPD Group said.

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