MTS opens first retail store in Moscow

Russia's largest mobile phone operator Mobile TeleSystems (MTS) has set up its first retail store on New Arbat street in downtown Moscow. The company plans to launch a country-wide network of exclusive shops under its brand.

Russia’s mobile phone market is reaching saturation. Most people who want and can afford a phone already have one. Analysts say operators must build customer loyalty and lock consumers into their products.

MTS is an example of this strategy. At the new shops customers will be able to change tariffs and handsets and buy accessories. But they will also have access to new services like sending photos, downloading music and finding one’s whereabouts with GPRS.

“On average, a customer changes phones every 6-8 months,” says Mikhail Shamolin, vice president of MTS. “So, every time they come back to change their phone, if they go  to a dealer or a distributor, there is a chance that they will switch to another operator. We want our customers coming to us for all their needs.”

The fight for market share is also about luring subscribers from rivals, according to analysts. The new MTS shops aim to provide an incentive to switch from one operator to another.

Finally, phone companies need to raise average subscriber revenues. On average, Russian mobile phone users spend only 6 to 8 dollars per month and will not readily sign up for extra services. Despite the lures of WAP and mobile internet, analysts say Russian consumers still view phones as simply a way to stay connected.