Carphone Warehouse is expected to announce that it will be closing its 11 Best Buy superstores in the UK, following disappointing performance since they first started opening in 2010. The delayed start - they were first planned for 2009 - can't have been good either.
The mobile phone retailer joined forces with the American retail giant to launch Best Buy Europe and the retail superstores opened in the UK only a year ago, but a tougher than expected marketplace and recession-torn Britain has proved too much for the venture, it seems.
The company had planned to launch some 200 stores across the Europe by 2013, before announcing plans to scale back that number to 100 in June. But it quickly stopped at just 11 in the UK.
"We always said we would open 11 stores and then conduct a strategy review. We are now conducting our evaluation with our partners and will provide an update in due course," a Carphone Warehouse spokesperson said on Sunday. The company declined to comment further.
So far, the shops have racked up losses of £83 million. A further half-year loss of £35 million is expected to be announced this week.
That's despite good opening weekends from its store in Thurrock, which, in 2010, enjoyed the best opening weekend ever of any Best Buy around the world:
"I’m delighted to announce that the first three days of our opening weekend in Thurrock have been confirmed as the biggest ever opening weekend for a Best Buy store anywhere in the world by volume of sales", Paul Antoniadis, CEO of Best Buy Branded Operations, said in May last year. "Everyone on the Best Buy team is thrilled with the start of this new chapter in Best Buy’s story".
According to the Sunday Times, "Negotiations continued this weekend, although sources said plans for the closure could be announced as early as Tuesday, when Carphone, chaired by Charles Dunstone, announces half-year results."
However, the British newspaper says that it won’t be the end of the Best Buy brand in the UK with the company’s Carphone Warehouse stores being revamped to include "mini" Best Buy stores selling electrical goods.
UPDATE: Best Buy has issued a statement to Pocket-lint stating that "A consultation on the closure of its Best Buy branded stores will start with all Best Buy team members. Best Buy Europe is confident it will be able to redeploy the large majority of those affected within other areas of its business. The intention is to complete the closure of these stores by the end of the calendar year."
"Best Buy Europe, the joint venture between Carphone Warehouse Group plc and Best Buy Co., Inc. today announced its intention to focus its capital investment and ‘connectivity’ strategy on its small box Carphone Warehouse stores and to close its Best Buy branded big box stores in the UK."
The companies say that the "Wireless World" retail format in its smaller stores gets a better return on investment.
Best Buy Europe goes on to says that "With this refocus in strategy, the company will now be able to accelerate the roll-out of its ‘Wireless World’ stores and the enhancement of its online and mobile commerce platforms."
Andrew Harrison, CEO of Best Buy Europe, adds: “After conducting a thorough strategic review of our operations, we believe that our capital investment and ‘connectivity’ strategy should be prioritised within our Carphone Warehouse stores as they offer a higher and proven rate of return. The technology world has changed substantially since 2008 and we are confident we will best serve our customers by investing in a single brand and format rather than two.”
Via The Sunday Times