Best Buy to close its 250 small-format mobile stores
Best Buy is getting out of the mobile phone store business.
The consumer electronics giant plans to close all of its approximately 250 freestanding Best Buy Mobile stores by the end of May. The Star Tribune first reported the news.
The smaller-format stores, which are typically located in malls, average about 1,400 sq. ft., and contributed just over 1% to the company’s overall revenue and 1% to its overall square footage, according to Reuters. The retailer will continue to sell mobile phones through its 1,000 U.S. Best Buy stores and online.
"We feel good about the opportunity to retain customers and transition them to another one of our sales channels," Best Buy CEO Hubert Joly wrote in a letter to workers. He noted that 85% of the standalone Best Buy Mobile stores are within three miles of a regular big-box store.
In the letter, Joly explained that Best Buy began opening the small-format mobile stores more than 10 years ago, when margins in the business were high.
“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 wrote.
Analyst Neil Saunders, managing director of GlobalData Retail, said he applauded the chain’s decision to shutter the division.
“As much as this format once allowed Best Buy to tap into a very fast-growing category, cell phone sales growth is now far less impressive,” he commented. “Ultimately this means that the economics of the stores no longer stack up. With technology becoming more integrated, we also believe that the rationale for a stand-alone mobile store has faded.”
The consumer electronics giant plans to close all of its approximately 250 freestanding Best Buy Mobile stores by the end of May. The Star Tribune first reported the news.
The smaller-format stores, which are typically located in malls, average about 1,400 sq. ft., and contributed just over 1% to the company’s overall revenue and 1% to its overall square footage, according to Reuters. The retailer will continue to sell mobile phones through its 1,000 U.S. Best Buy stores and online.
"We feel good about the opportunity to retain customers and transition them to another one of our sales channels," Best Buy CEO Hubert Joly wrote in a letter to workers. He noted that 85% of the standalone Best Buy Mobile stores are within three miles of a regular big-box store.
In the letter, Joly explained that Best Buy began opening the small-format mobile stores more than 10 years ago, when margins in the business were high.
“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 wrote.
Analyst Neil Saunders, managing director of GlobalData Retail, said he applauded the chain’s decision to shutter the division.
“As much as this format once allowed Best Buy to tap into a very fast-growing category, cell phone sales growth is now far less impressive,” he commented. “Ultimately this means that the economics of the stores no longer stack up. With technology becoming more integrated, we also believe that the rationale for a stand-alone mobile store has faded.”