Despite reporting positive Q4 sales results (up 9%), Best Buy will shut down 250 of its small-format Mobile stores across the U.S. by May 31, 2018. The retailer said the stores only contributed to a little over 1% of overall revenue, with costs of operations that are higher compared to its big box stores.
“We began to open them more than a decade ago, before the iPhone was even launched,” explained Hubert Joly, Chairman and CEO for Best Buy in an internal letter. “Fast forward to 2018 and the mobile-phone business has matured, margins have compressed and the cost of operations in our Mobile stand-alone stores is higher than in our Big Box stores.”
Best Buy will continue to operate 52 mobile stores in Canada and also will sell mobile phones both online and in its big box stores in the U.S., according to the letter. While the company did not disclose how many employees will be affected by the closings, the memo mentioned Best Buy will help employees find jobs within the company for three months.
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The stores, which are approximately 1,400 square feet in size, launched mainly within malls about a decade ago. And while small format stores are increasingly popular in retail today, the decision to close these locations comes at a time when consumers are directly shopping for mobile devices at wireless carriers’ standalone shops, Apple stores and even Amazon.
“We believe the best way to serve customers is to sell phones in channels where they have access to our whole range of connected devices,” said Joly.
