Toggle Dark Mode
Indicating that it wants to operate more efficiently and turn a profit amid growing competition in the mobile phone market, Best Buy announced on Wednesday that it plans to shutter 250 of its U.S.-based mobile phone outlets, according to a Reuters report.
In an internal memo obtained by Reuters, the nation’s No. 1 consumer electronics retailer indicated that by May 31, 2018 it will have shuttered the 250 U.S. mobile phone shops, which not only account for less than one percent of the company’s annual revenue, but are spatially a fraction of the size of its larger, brick and mortar big box stores.
While the company’s mobile phone stores may be closing up shop, the Minnesota-based retailer indicated it will continue selling mobile phones via its 1,000 U.S. big box stores and online. And that its 52 Canadian mobile phone stores will not be affected by the decision.
Best Buy’s Chief Executive, Hubert Joly, explained to employees in a statement obtained by Reuters that the company had to rethink and realign its mobile strategy amid increasing competition in the market, which it began penetrating with its exclusive mobile phone shops over a decade ago — even before Apple’s iPhone emerged on the scene.
“Fast forward to 2018 and the mobile phone business has matured, margins have compressed and the cost of operations in our mobile standalone stores is higher than in our big box stores,” Joly said.
The company declined to comment on exactly how many employees would be effected as a result of the decision — however, Joly noted in his memo that Best Buy will help those employees look for other, open positions which may be available within the company over the next three months. Additionally, Best Buy will offer severance packages to eligible employees who decide to leave the company after May 31 — promising also to help them with an external job search, upon request.
The 250 mobile shops in question, which average about 1,400 square-feet, apiece, will be shuttered effective May 31, 2018 the company said.
In recent years, Best Buy has implemented strategic measures in a bid to bolster sales and improve its customer service experience, including the closure of several of its larger, big box retail stores, which average about 40,000 square-feet in comparison.
Fortunately, according to Reuters, those effort’s have been largely successful thus far, and the company has been able to “grow comparable sales” at most of its big box stores during six of the last eight fiscal quarters.