Best Buy Plans To Close Hundreds Of Mobile Phone Stores

The electronics retailer announced the closure of 250 mobile phone stores. The move is part of the company's strategy for continuous optimization.

This Monday, May 9, 2011, photo shows a Best Buy Mobile store is shown in a mall in Dallas.
LM Otero / AP Images

The electronics retailer announced the closure of 250 mobile phone stores. The move is part of the company's strategy for continuous optimization.

The Richfield-based electronics retailer announced it was initiating the closure of its mobile stores. Best Buy will be shutting down it’s 250 small format stores in the U.S and will happen by summer of this year.

These mobile stores are located in shopping malls and are smaller than the big-box stores. According to the Star Tribune, these retail stores have become less profitable for the electronics chain.

The company’s CEO, Huber Joly, who is originally from France, informed and notified employees of the closings. The above analysis confirmed the decision is part of a strategy towards a continuous optimization.

“The mobile phone business was in a period of high growth and margins were high,” he wrote in a letter to employees that the company provided to the Star Tribune. “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.”

Joly went on to explain that the revenue generated from the Best Buy mobile stores brought about 1 percent of the company’s overall revenue. In addition, the retailer with this business decision will be transferring the business to its 1,000 brick and mortar stores accompanied by the website of Best Buy.

Joly’s letter said he felt good about Best Buy’s prospects to grow the business in spite of closures. Joly was looking forward to the changes and the transition for customers.

“We feel good about the opportunity to retain customers and transition them to another one of our sales channels,” Joly wrote in the letter, adding that 85 percent of Best Buy’s mobile stores are within 3 miles of one of its big-box stores. “We are very excited by our mobile business and its prospects for growth.”

This closing of stores is not a recent trend for the electronics retailer. The daily newspaper from Minneapolis also stated that Best Buy at its peak had 400 mobile phone stores. It has been closing dozens of stores every year that includes big-box store locations. It has approximately closed 10 store locations per year over just these past few years.

The news does not mean layoffs automatically. By the end of May of this year, the company will offer existing employees the chance to find other positions internally, or transition to an in-home advisor post. For those wishing to part from Best Buy will be given a severance.

Best Buy is not the only retailer closing store locations. As reported by CNBC, other major retail chains have announced similar plans to shut down a number of store locations.

“Already this year, a handful of other major retailers including Walmart, Toys R Us, and Sears Holdings have announced plans to shutter stores, leaving a glut of vacant boxes behind, and many within malls. Best Buy made it clear, though, that its bigger boxes and its operations within Canada and Mexico won’t be impacted by the news.”