Comcast Buys Into Retail

Some people are fanatics for classic cars or Snapple bottle cap trivia. For others it’s Sophia Loren films, the symphonies of Gustav Mahler or bus paraphernalia (that’s PBS NewsHour anchor Jim Lehrer’s favorite).

For Carlisle, Mass., resident Kent Gonzales, life in the fanatic lane means frequent visits to a store in the Station Landing housing development in Medford, a Boston suburb. It’s early in 2007, and Gonzales is visiting Connect, a 2,000-square-foot consumer electronics retail store co-managed by Comcast’s local cable system and Circuit City. In one corner Comcast’s triple play of digital video, high-speed Web access and digital phone services is touted.

For Gonzales, the love affair began early in December, on the store’s opening day. Gonzales was searching for a high-definition TV set. One hour later he had purchased the set and arranged Comcast installation appointments for HDTV services and high-speed access.

Typically as many as 20 people follow Gonzales’ routine of visiting Connect daily, says Charisse Jacques, one of the store’s employees. "I’m here all the time," Gonzales admits Jan. 3 during his visit. Whether the motive is getting new headphones or understanding video on demand, this is his favorite shopping place. "It’s much friendlier, much less intimidating than other places," he explains. "You feel you get more personal attention, and the people here are willing to walk you through the whole way on what a product does. There’s nowhere else in this city you can go for something like this."

Plans For Second Store

Well, that’s true for now. Knowingly or not, Gonzales has embraced an experimental prototype with major national implications for cable system marketing and technology-focused retail stores such as Best Buy and CompUSA. Comcast and Circuit City Stores are planning a second location in the Boston area this spring, with at least double the square footage of the Station Landing store. A few months after that branch opens the two companies will evaluate traffic and sales in the stores before determining their next move.

Of the two parties, Circuit City is the most openly optimistic of a future beyond Boston. "We’re hoping this store becomes a trusted source of digital solutions," senior public relations representative Jackie Forman says. Circuit City declined to make marketing or operations executives available for this story.

"Until we have some test metrics under our belt, I don’t have an answer about an existence beyond Boston," says Bob Faught, Comcast’s SVP of retail sales, based in the MSO’s Philadelphia headquarters. "Let’s make this vehicle viable in Boston first."

Creating Connect

The store’s off to a good start in part because of the strategic thinking that went into creating it. Circuit City and Comcast approved the idea of Connect last spring, after a few months of exploring ways to expand their retail relationship. From the start, both firms wanted an electronics store with a different kind of environment, one where visitors would feel comfortable, less pressured, Faught says. "Instead of just showcasing our products, we wanted to demonstrate how our products interplay with different accessories, such as how broadband works with MP3 players or digital cameras. You encourage the customer to sit down, learn about what they could buy and how what they buy leads to an easier day-by-day lifestyle," he notes.

It’s not just talk. Inside the bright walls of Connect’s Station Landing store there’s a hospitality bar serving complementary beverages. By the main entrance customers relax at a table surrounded by chairs and sofas. As many as five Circuit City employees work at Connect during a shift, making sales, answering questions — often with demonstrations showcased on a tablet PC — and serving refreshments at the hospitality bar.

First-Mover Mentality

Connect represents one of two experimental ventures Comcast wants to make viable throughout its Metro Boston system, which covers more than 645,000 customers in the city and 64 nearby communities. The other is "Mobile Access," a wireless phone service from the joint venture involving Sprint Nextel, Comcast, Time Warner, Cox and Bright House Networks (through parent Advanced/Newhouse Communications). Metro Boston began the rollout four months ago, making Mobile Access available to 60% of its customer base, including Boston proper. The remaining Metro Boston customers will be able to buy Mobile Access this week or next, system executives disclosed recently.

Boston customers can choose from three levels of wireless service: basic (mobile phone, some Web and e-mail functionality) for $15 per month; enhanced (basic plus unlimited Web functionality and 22 mobile TV channels) at $15 per month; and premium (everything in basic/enhanced plus 11 more mobile TV channels) at $25 per month. All will use Nextel-supplied mobile phones.

Metro Boston regional VP Paul D’Arcangelo claims Mobile Access has exceeded early sales expectations, but he wouldn’t speculate how many of his customers will convert their triple-play cable relationship into a quad play. "Consumers appear excited about the opportunity," he says," but this is an exercise in crawling before we run."

In fact, D’Arcangelo’s operation has a track record of being first out of Comcast’s gate with new services. Less than two years ago, Metro Boston introduced digital telephony and triple-play bundles. More recently, without anywhere near the local fanfare that Connect and Mobile Access received, the system premiered a VOD version of Ziddio, Comcast’s national Web destination devoted to user-generated programming (see p. 11).

D’Arcangelo attributes the system’s reputation as a first mover to the area’s attractive demographics, led by a large population of high-income tech adopters. The system also includes "Route 128," the Boston beltway whose suburbs house Sun Microsystems, Raytheon and other notable tech corporations. "There are a lot of savvy consumers who want to be first with new things," he says. "But if [we couldn’t] deploy those services effectively, [Comcast] would look elsewhere…We can do trials here because we have the expertise to execute them well."

Over the last year alone, the system hired 90 technicians and 130 customer care representatives to prepare for such ventures as Mobile Access and Connect, while retraining more than 120 veteran field technicians to handle the triple play and wireless.

Before the 2005 triple-play launch, 50% of all customer inquiries were handled by Comcast Metro Boston service reps, the other half by third-party call centers. Now, 90% of customer calls are handled by Metro Boston service reps. For Mobile Access, Comcast and Sprint Nextel reps handle customer calls. At some point, Metro Boston personnel will handle all service calls for Mobile Access, says Beverly Watts, the system’s customer care VP.

"After we get more results of this pilot and we finalize strategic planning for the next phase, then we’ll set up a transition," Watts adds. In the meantime, her CSR staff is getting educated on wireless functionality.

Low-Key Marketing, So Far

The only promotion Connect has received are cross-channel spots and direct mail to customers in or near Station Landing, according to John Mataraza, one of Metro Boston’s senior product managers. Circuit City collaborated on production of the cross-channel spots with Comcast. Web banner ads, newspaper ads and other promotions may be used when the second Connect store opens.

Mobile Access also has taken the same marketing course — direct mail and cross-channel spots. Another direct mail blitz will begin later this month, after wireless is available area-wide, Mataraza promises. Not long after, Comcast will start sales and demo areas in local Sprint retail stores and Comcast service offices.

Comcast Metro Boston by the Numbers >

EMPLOYEES: 1,475

HOMES PASSED: 1.1 MILLION

MILES OF PLANT: 9,000

BANDWIDTH: 860 MHZ

PERCENT OF PLANT UPGRADED: 100%

BASIC SUBS: 645,000

BASIC PENETRATION: 57%

BASIC RATE: $50.60/mo.

DIGITAL SUBS/PENETRATION: N/A.

DIGITAL TIER RATE: $7.95/mo.

HIGH-SPEED ACCESS SUBS/PENETRATION: N/A

HIGH-SPEED ACCESS RATE: $42.95/mo.

DIGITAL PHONE SUBSCRIBERS/PENETRATION: N/A

DIGITAL PHONE RATE: $39.95/MO.

HDTV: 22 CHANNELS, INCLUDING DISCOVERY HD THEATER, ESPN HD, ESPN2 HD, HBO, MHD, NATIONAL GEOGRAPHIC HD, SHOWTIME, TNT, UNIVERSAL HD AND LOCAL ABC, CBS, FOX, NBC AND PBS AFFILIATES

DVR RATE: $9.95/MO.

AD INSERTION: 43 CHANNELS

Source: Comcast

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