Best Buy is closing all 250 of its U.S. mobile-phone stores by the end of May, 2018.
Despite predictions of growth in the smartphone market for this year after a lackluster 2017, the company has decided that the phone-focused stores provide little value to its broader business.
The 250 outlets are mostly located in shopping malls and are much smaller than its 1,000 big-box retail stores, which the company said will continue to sell handsets. The closures shouldn’t prove too inconvenient for most Best Buy shoppers as 85 percent of the phone stores are reportedly within three miles of one of its big-box sites.
For affected employees, however, the situation is far more troubling, though the company is promising to help with job searches before the stores close down.
In a letter to employees this week that’s been seen by Reuters, Best Buy chief executive Hubert Joly said that in the 10-plus years since the company opened the first of its smaller stores, “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.”
With additional pressure coming from online marketplaces, Best Buy has worked to enhance its own online store in recent years in a bid to compete. Free shipping, price matching offers, and try-before-you-buy schemes have also been part of efforts to attract more customers.
When sales of phones and computers at Best Buy fell at the end of 2015, Joly pinned the blame on manufacturers for failing to bring exciting new devices to the market, which meant customers were reluctant to upgrade.
This year, however, analysts at IDC are forecasting market growth, though admittedly it’s developing markets that could see much of that extra business. IDC said changes and development in software and components will likely drive sales in the mobile marketplace in 2018.
“Improvements in speed, power, battery life, and general performance will be critical in driving growth at a worldwide level as the smartphone evolves into a true all-in-one tool,” IDC research manager Anthony Scarsella said.
Other data from Statista suggests the number of smartphone users in the U.S. will continue to grow in the coming years, with Best Buy believing its big-box stores are best placed to pick up some of that extra business in place of its struggling mobile-only stores.