By Craig Patterson
US-based consumer electronics retailer Best Buy has announced that it will close all 250 of its small-format mobile phone stores in the United States, saying that the locations had become less profitable and account for about 1% of total revenue. Best Buy says that its small-format Canadian stores will remain open, however.
On Wednesday afternoon, Best Buy’s US CEO sent a memo to employees that the US stores will close by the end of May, and that every effort will be made to retain workers.
In a statement, Best Buy Canada says:
“The announcement made in the U.S. does not impact our mobile business here in Canada. Best Buy Mobile stores in Canada continue to be an incredibly important part of our overall company strategy and we remain firmly committed to the business.”
Best Buy launched its small-format mobile phone stores in 2006. Things have certainly changed since then — for example, Apple’s popular iPhone hadn’t even launched then.
Stores average about 1,400 square feet each, whereas a typical Best Buy store spans about 40,000 square feet.
Costs to run Best Buy’s smaller US stores are high and many are in higher-rent shopping centres — in the United States, about 85% of these smaller stores are located within about 5 kilometres of a big-box Best Buy store.
"While tempting to spin this as a death of retail signal in the US, it is more likely simply addressing realities in the cell phone specialty category and the move big brands like Apple and Samsung have made in direct-to-consumer. The Canadian mobility landscape is not yet as cutthroat as the US," said David Ian Gray, consultant and retail strategist/founder of DIG360.
Best Buy operates 56 mobile phone stores in Canada, which represents a penetration about twice that per capita when compared to the United States. The provincial breakdown includes 12 stores in British Columbia, nine in Alberta, 28 in Ontario, six in Quebec, and one in Nova Scotia. Many of these are in the country’s leading malls.
Best Buy entered Canada in 2002 with eight stores in the Greater Toronto Area, and it now boasts almost 200 stores in all 10 Canadian provinces. Its Canadian headquarters are in Burnaby, east of Vancouver.