Wireless brands at big box retail stores like Best Buy are so prevalent that their presence is often taken for granted, but T-Mobile is expanding its brand like never before, and just in time for the holidays.
Last month, T-Mobile said it expanded availability in more than 900 Best Buy stores nationwide. The same day, it announced that its prepaid brand, Metro by T-Mobile, had launched in more than 2,300 Walmart stores nationwide, offering new deals for savvy shoppers.
T-Mobile followed that up this past week with a press release touting its exclusive new offers on smartphones, including the latest 5G phones, at thousands of Walmart stores across the country, with some devices selling for less than $150.
What’s the deal? The question came up during T-Mobile’s third-quarter earnings call. Specifically, T-Mobile management was asked for their view on these channels driving fourth-quarter 2021 and future growth relative to years past.
“We’re incredibly excited about this,” said Jon Freier, president of the Consumer Group at T-Mobile. “I think when you look at what Walmart has done and what Best Buy has done in the pandemic and how they have completely revolutionized their particular companies … Walmart is the place to go shop in rural America. It is incredible what Walmart has done,” including with its digital transformation.
When you look at Best Buy as a premiere consumer electronics retailer across the United States, “those are attractive opportunities for us,” he said. “You have to remember, too, that we haven’t really played in national retail, in these national retailers, in a very long time. As a matter of fact, just in the last quarter, we quadrupled, with these announcements, our number of national retail locations. So we see those as big opportunities for our company to be in the customer bases of Walmart and in Best Buy and see significant switching opportunities in those spaces as well.”
Clearly, “they’re attracted to the industry’s best 5G network and all of the opportunity that our company represents over the next several years,” he added. Freier said he doesn’t have numbers exactly by channel for Q4 or the years beyond, but “we’re very bullish about these opportunities. We’ve got great strategic relationships with Walmart and Best Buy. We’ve been engaged in a lot of conversations over the last several months” and confident in the approach there.
According to Wave7 Research, T-Mobile has been available at Best Buy for months and most of the branding these days at Best Buy is for T-Mobile, with some Sprint branding at a minority of stores last month.
Jeff Moore, principal at Wave7, said it’s possible that T-Mobile worked out some back-office issues that prevented certain kinds of activations, and that’s why the hullabaloo is occurring now. But as far as its presence in stores, “this is something that already happened,” he said.
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“This is part and parcel of their growth expansion into rural markets,” said William Ho, principal analyst at 556 Ventures.
Corporate wireless stores require buying or renting a location and staffing it – something they can avoid by going into the big box retailers. “If you already have Best Buy or Walmart in those areas where you’re looking to grow, it’s like rent versus buy. It’s an effective means to get your distribution numbers up in order to get the gross adds up,” Ho said.
During its third-quarter earnings call on Thursday, UScellular President and CEO Laurent Therivel was asked what his company is seeing from T-Mobile and those big-box retailers in the rural and smaller markets where UScellular competes.
“We are not seeing a major change there,” Therivel said. “I think thus far we continue to compete well with T-Mobile. I think from a distribution perspective, I think they’re trying to find a way to create distribution without necessarily having to build it themselves, and that’s a difficult value proposition. We feel good about our network of distribution, company-owned stores, dealer stores plus some of those same partnerships that you’re talking about. We have good distribution coverage in rural America that supplements the strong network. So thus far at least, we haven’t seen a meaningful increase in win share or in subscriber effect from what T-Mobile has been doing.”