cellular/dy/21″/mike1st/mark2nd

By DOUGLAS YOUNG

Staff Reporter

Wireless telephones at K-Mart and Longs Drugs may seem like a retail mismatch.

But there’s a good chance both retailers will be selling off-the-shelf wireless phones when Pacific Telesis Group launches its new Personal Communications Services (PCS) wireless phone service next month in Los Angeles.

In bringing wireless telephones to the masses, PacTel and other providers believe the mass marketing retail approach is crucial.

Analysts say it’s a sound strategy in the long term, as wireless phone service becomes cheaper and in more widespread use. But the complexities of wireless service and the relatively high price of the phone sets themselves might make PCS phones difficult to mass market in the initial stages.

To help offset that resistance, PCS providers say they will price their service in L.A. to be slightly less than that of cellular service.

PCS operates much like cellular phone service. The main difference is that PCS was designed from the ground up as a digital technology, while cellular services began as analog systems and are now a hybrid of analog and digital.

That difference, say PCS providers, will make PCS services superior to cellular, both for sound quality and call continuity.

PacTel and Sprint PCS, which also expects to launch a PCS service in L.A. by year end, both want to differentiate themselves from cellular service providers by selling their service to a broader array of consumers than those using cellular.

To do that, PacTel, Sprint and other PCS providers nationwide have forged alliances with many of the nation’s top retailers, including electronics giants Best Buy, Circuit City, Computer City, Comp USA, Radio Shack and Good Guys; office supply specialists Office Depot, Office Max and Staples; and general mass merchandisers Robinsons-May, Montgomery Ward, Sears, K-Mart and Longs Drugs.

Few of those retailers would disclose their PCS plans for Los Angeles, citing competitive reasons. All of them are selling PCS phones for sale in San Diego and Sacramento, where service has been available for several months.

PacTel PCS phones will carry a suggested price of $150 each at retailers that stock them, while the suggested price of Sprint PCS phones will be $200. Both PacTel and Sprint are providing incentives for retailers to encourage them to sell the phones at the suggested prices.

“We said we would fundamentally change the paradigm by making PCS a traditional consumer-type product,” said Lester Lee, vice president of sales for Pacific Bell Mobile Services. “We want to make (buying PCS service) as easy as buying an electric razor.”

Retailers are betting big bucks that Lee will be right. But at least one, electronics specialist Dow Stereo/Video of San Diego, reported that buyers of PCS phones have required a lot of customer service support so far. Dow has been selling PCS phones in San Diego since late last year, when Sprint first launched its PCS service there.

“This type of product is not an impulse product at this point in time,” said Dow spokesman Tom Campbell. “(Customers) want to be comfortable when they walk out the door that this is what they need and want, and that takes time to show them.”

Campbell estimated that the average PCS customer requires between 25 and 30 minutes with a salesperson. He declined to disclose specific sales figures, except to say that Dow has sold thousands of PCS phone sets since the product’s launch in late December.

Likewise, Montgomery Ward spokesman Dan Bode declined to say how many units the chain has sold since it started stocking PCS phones last year in San Diego and Sacramento, except that sales have been “well above our expectations.”

Like Campbell, he acknowledged that the phones are not likely to sell themselves in the initial stages.

“Anybody that’s buying a product today especially something as new as this will want to know what this is,” he said. Still, he added, customer resistance so far because of the product’s complexity have been “minimal,” and returns have been low.

The reasons for the high learning curve are two-fold. Most importantly, PCS phones are not a stand-alone product like a TV or stereo, in that they require a contract with service providers like Sprint PCS or PacTel before the units can be activated.

In addition, PCS phone sets contain many add-on features, such as call waiting, paging and messaging, that are not readily familiar to many consumers.

Officials from PacTel and Sprint acknowledged that PCS phone sales from mass merchandisers will initially require at least some degree of hand-holding from in-store salespeople service that mass merchants are not always equipped to provide.

Accordingly, both companies employ teams of people who do nothing but conduct training sessions for salespeople, both inside and outside the stores.

The heavy emphasis on customer support is typical with a new high-tech product like PCS, said Richard Giss, a partner in the trade retail services group at Deloitte & Touche LLP.

What’s different about this product rollout, however, is its debut in mass-merchandise stores rather than in specialty retailers that typically offer a higher degree of customer support, he added.

“Historically, products like cell phones and pagers started out in specialty retailers because people had a lot of questions,” he said. “I think when they first introduce PCS, the required level of support from sales associates will be much higher than for other products. The retailers that can offer that support will be more successful.”