Your browser is out-of-date!

Update your browser to view this website correctly. Update my browser now


Best Buy Hanging Up On Stand-Alone Phone Stores

The retailer will pull the plug on its small-format Best Buy Mobile shops before June.

Best Buy’s fleet of stand-alone mobile phone stores, once envisioned to grow to 1,000 locations, will soon be no more.

The retailer said it plans to pull the plug on its small-format Best Buy Mobile shops by the end of May, when all 257 remaining locations will be shuttered.

The company launched the cellular specialty chain in 2006 with former U.K. mobile partner Carphone Warehouse on the eve of the smartphone era, and quickly ramped up to hundreds of locations in malls across the country.

The 1,400-square-foot shops carried a curated selection of phones, tablets, carrier plans and accessories, and served as an off-site supplement to the mobile departments within Best Buy’s big-box flagship stores.

See: Best Buy Revamping Mobile Phone Departments

But recent changes in the wireless business — including smartphone saturation, slower growth, installment billing, unlimited data plans, and the growing popularity of prepaid and unlocked phones — have made the big-box and online sales formats “more economically compelling,” Best Buy said in an 8-K filing.

In a letter to employees obtained by Best Buy’s hometown StarTribune, CEO Hubert Joly explained that the format was launched when “the mobile phone business was in a period of high growth and margins were high. 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.”

The mobile shops represent about 1 percent of total Best Buy revenues, he said, and about 1 percent of its total brick-and-mortar footprint.

“We feel good about the opportunity to retain customers and transition them to another one of our sales channels,” he wrote, noting that 85 percent of the wireless boutiques are located within 3 miles of a flagship store. “We are very excited by our mobile business and its prospects for growth.”

The company expects to take a pre-tax restructuring hit in the first quarter of between $55 million and $65 million, mostly related to lease terminations, it said.