Having a store means they have a local presence too. Some less confident with tech people like the option of having a store to walk in to and talk to some one face to face as an option, so it can be worth customers that way even if the store isn't busy.
Don't forget that behind the scenes, many of these retail operations manage their corporate customers too. I don't pop down to the stores too much, but the staff still do a lot of work for us behind the scenes with adds/moves/changes, new product enquirers, issues with the devices etc.
I bet 1/2 or more of the people in Telecom store are complaining about something or are unable to fix the problem with their device. 2 Degrees customer demographic IMO is much more tech savvy and is far less likely to need to go to the store however 2 Degrees wants to ensure they have access the full market including those that need a little extra help in person.
I don't think I've been into a mobile shop as a customer in over 5 years. The last time was to try and sort out a phone I had purchased from TWL. Telecom weren't allowed to be the repair agent instead I had to have no mobile phone for 2 weeks while TWL attempted to fix a fault that was inherent in that model of phone. It was returned... fault re-appeared... rage ensued. Went back and had to speak to the manager of TWL to get my money back and then went down to Telecom went on a plan for 1 year and was given a free phone. Then moved to pre-pay and then 2 degrees a couple of years after that all done without entering a store.
Most people don't go to mobile stores unless window shopping / have a problem / cannot get through to help desk.