Best Buy to shutter mobile phone stores as customers flock to wireless carriers, Apple sto...

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U.S. big box retailer Best Buy on Wednesday announced the imminent closure of 250 satellite stores dedicated to mobile phone sales, pinning the nationwide shutdown on sluggish sales amidst increased competition from cellphone carriers, etailers and first-party shops like the Apple store.




In a statement to The Wall Street Journal, Best Buy chief executive Hubert Joly said the company's mobile phone outlets, which on average run about 1,400 square feet, are more expensive to operate than a 40,000-square foot full-size location.

The smaller stores, commonly found in malls, will cease operations by the end of May.

Perhaps more important to Best Buy's bottom line, the mobile stores are not as lucrative as they were at the start of the smartphone boom. Currently, sales from the specialized outlets contribute about 1 percent to Best Buy's revenue, Joly said.

No single event or product is to blame for Best Buy's mobile slump. The overall cellphone industry has simply condensed since the company diverted capital to take advantage of what once was a fledgling market more than ten years ago.

Along with cellular network stores run by AT&T, Sprint, T-Mobile, Verizon and countless regional operators, handset makers began selling their wares through their own shops. Apple, for example, built out its retail chain to cover nearly 300 locations in the U.S.

"We began to open them more than a decade ago, before the iPhone was even launched," Joly told employees in an internal letter. "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."

In addition to brick-and-mortar sales, consumers are increasingly purchasing -- and in the case of iPhone, preordering -- smartphones online, meaning Best Buy's competitor list includes e-commerce giant Amazon. While the big box retailer has done well to ramp up its own online efforts to find success where others, like Radio Shack, have failed, the cellphone business is a different beast.

Ironically, Best Buy in 2012 expanded the mobile phone store initiative at the cost of its big box business to take advantage of emerging smartphone trends. At the time, reports estimated the retailer sold as many iPhones as Apple did, though that metric is thought to have shifted in Apple's favor over the past couple years.

Most recently, Best Buy caused a minor controversy when it charged iPhone X buyers a $100 premium when purchasing the handset at full price. Less than a week later, the company stopped selling unactivated iPhone X and iPhone 8 units, moving instead to installment-based purchases through AT&T, Sprint or Verizon.

Comments

  • Reply 1 of 20
    Another one bites the dust. I hope not many employees lose their jobs because of these closings. However, there's not much point in Best Buy keeping something that's losing money. I'm sure there's already more than enough smartphone sellers in the U.S.
    albegarc
  • Reply 2 of 20
    NY1822NY1822 Posts: 616member
    never even knew these existed 
    SpamSandwichStrangeDayszroger73bonobob
  • Reply 3 of 20
    racerhomie3racerhomie3 Posts: 1,168member
    I always liked retail stores selling iPhones.
    But did these stores give you support?
    But having 100s of Apple Stores does not give you much advantage.
  • Reply 4 of 20
    I went into Best Buy a month ago to get the iPhone X because I wanted to use my Best Buy Credit Card for the free warranty and all that. Turns out the 256gb version that I wanted was $1260, a little over $100 more than MSRP which I could get anywhere else. The cell phone sales guy couldn't tell me why it cost more at BB, which also sorely needs the business.

    A week later it hit me. BB gives rewards bucks which is about 10% of the purchase price, so BB bumped up the price to avoid handing out 10% off. But what I can't reconcile is why? If I had bought a toaster, video games, whatever that amounted to $1260, I'd still get 10% back as in-store rewards bucks. So if BB didn't want to lose that narrow profit margin to the 10% back, didn't they consider that they would gain it in the profit margins of whatever else I buy in-store? Like phone cases, screen protectors, games, headphones, etc.? 

    So long BB, you've lost any incentive I've had to use your CC. I just bought it at Apple anyway with my bank's CC.
    StrangeDaysalbegarcjbdragon
  • Reply 5 of 20
    Who needs Best Buy when there’s Bobby Allison Wireless? :). Ahh Best Buy...yet another step toward trying to prevent your inevitable road trip down Circuit City and HH Gregg lane.  Yet i am truly sad!  Where will I go to handle and try out products before I go buy them online for less and with no tax and free shipping?
  • Reply 6 of 20
    tulkastulkas Posts: 3,754member
    Wonder if this affects their Canadian operations too.
  • Reply 7 of 20
    flydogflydog Posts: 354member
    tulkas said:
    Wonder if this affects their Canadian operations too.

    U.S. big box retailer Best Buy on Wednesday announced the imminent closure of 250 satellite stores dedicated to mobile phone sales, pinning the nationwide shutdown on sluggish sales amidst increased competition from cellphone carriers, etailers and first-party shops like the Apple store.


  • Reply 8 of 20
    NY1822 said:
    never even knew these existed 
    Likewise.

  • Reply 9 of 20
    lkrupplkrupp Posts: 7,449member
    NY1822 said:
    never even knew these existed 
    Likewise.

    I’ve seen them in malls and airports in the Midwest.
    jbdragon
  • Reply 10 of 20
    jcs2305jcs2305 Posts: 841member
    Who needs Best Buy when there’s Bobby Allison Wireless? :). Ahh Best Buy...yet another step toward trying to prevent your inevitable road trip down Circuit City and HH Gregg lane.  Yet i am truly sad!  Where will I go to handle and try out products before I go buy them online for less and with no tax and free shipping?
    Honestly I still shop at BB. There is only on Apple store in my area, and BB is closer for me.  I bought my homepod there because I can get the points on their Citi My BB card. They price match with Amazon which is nice,  because sometimes I don't want to wait two days for an item via Prime, I like my instant gratification. :wink:

     Also BB has free shipping on most things. I would never buy my phones through them, especially after that price gauge crap with the iPhone X.. For other things though I don't think they are that bad. 


    I am not sure where you are shopping that you don't pay tax, but for Amazon and BB I pay tax as they ship from my home state.
  • Reply 11 of 20
    SpamSandwichSpamSandwich Posts: 31,492member
    NY1822 said:
    never even knew these existed 
    Likewise.
  • Reply 12 of 20
    macxpressmacxpress Posts: 5,000member
    NY1822 said:
    never even knew these existed 
    They have one in the Eastview Mall in Victor (Rochester, NY) which is where I go as this I the closest Apple Store to me. I honestly don't really know why these existed. Most of the time the employees are just sitting around, or standing outside the door waiting for someone to come in. I guess thats why they're closing them down. 

    I think they're only closing the Best Buy Mobile standalone stores, not the entire mobile division of Best Buy. I do see a lot of people getting phones of all makes though the mobile section of BestBuy inside the actual store so I'm sure thats a good source of revenue for them. Its just that I don't see why they needed standalone stores for this. 
  • Reply 13 of 20
    macxpressmacxpress Posts: 5,000member
    jcs2305 said:
    Who needs Best Buy when there’s Bobby Allison Wireless? :). Ahh Best Buy...yet another step toward trying to prevent your inevitable road trip down Circuit City and HH Gregg lane.  Yet i am truly sad!  Where will I go to handle and try out products before I go buy them online for less and with no tax and free shipping?
    Honestly I still shop at BB. There is only on Apple store in my area, and BB is closer for me.  I bought my homepod there because I can get the points on their Citi My BB card. They price match with Amazon which is nice,  because sometimes I don't want to wait two days for an item via Prime, I like my instant gratification. :wink:

     Also BB has free shipping on most things. I would never buy my phones through them, especially after that price gauge crap with the iPhone X.. For other things though I don't think they are that bad. 


    I am not sure where you are shopping that you don't pay tax, but for Amazon and BB I pay tax as they ship from my home state.
    Taxes online vary state to state. Here in NY, of course you have to pay taxes because if there's an item sold in NY you pay tax. I think you pay a tax for sneezing in NY. /s 

    But I think most states don't charge tax with amazon purchases. You're supposed to claim them on your taxes or something instead (yeah like everyone does that!) This is why you see AI advertise reduced pricing on Macs on B&H and sites like that with no tax, but then note only with 48 states.
    jbdragon
  • Reply 14 of 20
    zroger73zroger73 Posts: 731member
    RadioShack didn't have good luck as a multi-brand, multi-carrier mobile phone store, either.
  • Reply 15 of 20
    jbdragonjbdragon Posts: 2,184member
    macxpress said:
    jcs2305 said:
    Who needs Best Buy when there’s Bobby Allison Wireless? :). Ahh Best Buy...yet another step toward trying to prevent your inevitable road trip down Circuit City and HH Gregg lane.  Yet i am truly sad!  Where will I go to handle and try out products before I go buy them online for less and with no tax and free shipping?
    Honestly I still shop at BB. There is only on Apple store in my area, and BB is closer for me.  I bought my homepod there because I can get the points on their Citi My BB card. They price match with Amazon which is nice,  because sometimes I don't want to wait two days for an item via Prime, I like my instant gratification. :wink:

     Also BB has free shipping on most things. I would never buy my phones through them, especially after that price gauge crap with the iPhone X.. For other things though I don't think they are that bad. 


    I am not sure where you are shopping that you don't pay tax, but for Amazon and BB I pay tax as they ship from my home state.
    Taxes online vary state to state. Here in NY, of course you have to pay taxes because if there's an item sold in NY you pay tax. I think you pay a tax for sneezing in NY. /s 

    But I think most states don't charge tax with amazon purchases. You're supposed to claim them on your taxes or something instead (yeah like everyone does that!) This is why you see AI advertise reduced pricing on Macs on B&H and sites like that with no tax, but then note only with 48 states.
    I got my 12.9" iPad Pro late last year at B&H!!!  We get taxed from Amazon these days in California.  CA wanted their money and got their way with Amazon.   I think there's a BB Mobile store in my Mall, along with a full Best Buy store which also is selling phones.  Never made sense to me.  Besides, I always just get my phone online from the carrier I'm signing up service too.  I've never walked into a store to buy a cell phone.  Not even back in the dumb phone days.

  • Reply 16 of 20
    macxpressmacxpress Posts: 5,000member
    jbdragon said:
    macxpress said:
    jcs2305 said:
    Who needs Best Buy when there’s Bobby Allison Wireless? :). Ahh Best Buy...yet another step toward trying to prevent your inevitable road trip down Circuit City and HH Gregg lane.  Yet i am truly sad!  Where will I go to handle and try out products before I go buy them online for less and with no tax and free shipping?
    Honestly I still shop at BB. There is only on Apple store in my area, and BB is closer for me.  I bought my homepod there because I can get the points on their Citi My BB card. They price match with Amazon which is nice,  because sometimes I don't want to wait two days for an item via Prime, I like my instant gratification. :wink:

     Also BB has free shipping on most things. I would never buy my phones through them, especially after that price gauge crap with the iPhone X.. For other things though I don't think they are that bad. 


    I am not sure where you are shopping that you don't pay tax, but for Amazon and BB I pay tax as they ship from my home state.
    Taxes online vary state to state. Here in NY, of course you have to pay taxes because if there's an item sold in NY you pay tax. I think you pay a tax for sneezing in NY. /s 

    But I think most states don't charge tax with amazon purchases. You're supposed to claim them on your taxes or something instead (yeah like everyone does that!) This is why you see AI advertise reduced pricing on Macs on B&H and sites like that with no tax, but then note only with 48 states.
    I got my 12.9" iPad Pro late last year at B&H!!!  We get taxed from Amazon these days in California.  CA wanted their money and got their way with Amazon.   I think there's a BB Mobile store in my Mall, along with a full Best Buy store which also is selling phones.  Never made sense to me.  Besides, I always just get my phone online from the carrier I'm signing up service too.  I've never walked into a store to buy a cell phone.  Not even back in the dumb phone days.

    yeah it might be California and NY that charge taxes. I know there was at least one other state that requires Amazon to charge taxes (and most likely other online retailers). NY and Cali are very tax happy!
  • Reply 17 of 20
    boltsfan17boltsfan17 Posts: 2,198member
    jbdragon said:
    macxpress said:
    jcs2305 said:
    Who needs Best Buy when there’s Bobby Allison Wireless? :). Ahh Best Buy...yet another step toward trying to prevent your inevitable road trip down Circuit City and HH Gregg lane.  Yet i am truly sad!  Where will I go to handle and try out products before I go buy them online for less and with no tax and free shipping?
    Honestly I still shop at BB. There is only on Apple store in my area, and BB is closer for me.  I bought my homepod there because I can get the points on their Citi My BB card. They price match with Amazon which is nice,  because sometimes I don't want to wait two days for an item via Prime, I like my instant gratification. :wink:

     Also BB has free shipping on most things. I would never buy my phones through them, especially after that price gauge crap with the iPhone X.. For other things though I don't think they are that bad. 


    I am not sure where you are shopping that you don't pay tax, but for Amazon and BB I pay tax as they ship from my home state.
    Taxes online vary state to state. Here in NY, of course you have to pay taxes because if there's an item sold in NY you pay tax. I think you pay a tax for sneezing in NY. /s 

    But I think most states don't charge tax with amazon purchases. You're supposed to claim them on your taxes or something instead (yeah like everyone does that!) This is why you see AI advertise reduced pricing on Macs on B&H and sites like that with no tax, but then note only with 48 states.
    I got my 12.9" iPad Pro late last year at B&H!!!  We get taxed from Amazon these days in California.  CA wanted their money and got their way with Amazon.   I think there's a BB Mobile store in my Mall, along with a full Best Buy store which also is selling phones.  Never made sense to me.  Besides, I always just get my phone online from the carrier I'm signing up service too.  I've never walked into a store to buy a cell phone.  Not even back in the dumb phone days.

    Amazon made out pretty well too. They were able to build all these distribution centers around the state with huge tax breaks. 
  • Reply 18 of 20
    boltsfan17boltsfan17 Posts: 2,198member
    macxpress said:
    jbdragon said:
    macxpress said:
    jcs2305 said:
    Who needs Best Buy when there’s Bobby Allison Wireless? :). Ahh Best Buy...yet another step toward trying to prevent your inevitable road trip down Circuit City and HH Gregg lane.  Yet i am truly sad!  Where will I go to handle and try out products before I go buy them online for less and with no tax and free shipping?
    Honestly I still shop at BB. There is only on Apple store in my area, and BB is closer for me.  I bought my homepod there because I can get the points on their Citi My BB card. They price match with Amazon which is nice,  because sometimes I don't want to wait two days for an item via Prime, I like my instant gratification. :wink:

     Also BB has free shipping on most things. I would never buy my phones through them, especially after that price gauge crap with the iPhone X.. For other things though I don't think they are that bad. 


    I am not sure where you are shopping that you don't pay tax, but for Amazon and BB I pay tax as they ship from my home state.
    Taxes online vary state to state. Here in NY, of course you have to pay taxes because if there's an item sold in NY you pay tax. I think you pay a tax for sneezing in NY. /s 

    But I think most states don't charge tax with amazon purchases. You're supposed to claim them on your taxes or something instead (yeah like everyone does that!) This is why you see AI advertise reduced pricing on Macs on B&H and sites like that with no tax, but then note only with 48 states.
    I got my 12.9" iPad Pro late last year at B&H!!!  We get taxed from Amazon these days in California.  CA wanted their money and got their way with Amazon.   I think there's a BB Mobile store in my Mall, along with a full Best Buy store which also is selling phones.  Never made sense to me.  Besides, I always just get my phone online from the carrier I'm signing up service too.  I've never walked into a store to buy a cell phone.  Not even back in the dumb phone days.

    yeah it might be California and NY that charge taxes. I know there was at least one other state that requires Amazon to charge taxes (and most likely other online retailers). NY and Cali are very tax happy!
    Amazon collects sales tax in 45 states now. I was so bummed when they started charging sales tax here in California. 
    edited March 2018
  • Reply 19 of 20
    lukeilukei Posts: 333member
    roxsocks said:
    I went into Best Buy a month ago to get the iPhone X because I wanted to use my Best Buy Credit Card for the free warranty and all that. Turns out the 256gb version that I wanted was $1260, a little over $100 more than MSRP which I could get anywhere else. The cell phone sales guy couldn't tell me why it cost more at BB, which also sorely needs the business.

    A week later it hit me. BB gives rewards bucks which is about 10% of the purchase price, so BB bumped up the price to avoid handing out 10% off. But what I can't reconcile is why? If I had bought a toaster, video games, whatever that amounted to $1260, I'd still get 10% back as in-store rewards bucks. So if BB didn't want to lose that narrow profit margin to the 10% back, didn't they consider that they would gain it in the profit margins of whatever else I buy in-store? Like phone cases, screen protectors, games, headphones, etc.? 

    So long BB, you've lost any incentive I've had to use your CC. I just bought it at Apple anyway with my bank's CC.
    Margin for a reseller on iPhone is single digits. That’s why. 
  • Reply 20 of 20
    SpamSandwichSpamSandwich Posts: 31,492member
    macxpress said:
    jbdragon said:
    macxpress said:
    jcs2305 said:
    Who needs Best Buy when there’s Bobby Allison Wireless? :). Ahh Best Buy...yet another step toward trying to prevent your inevitable road trip down Circuit City and HH Gregg lane.  Yet i am truly sad!  Where will I go to handle and try out products before I go buy them online for less and with no tax and free shipping?
    Honestly I still shop at BB. There is only on Apple store in my area, and BB is closer for me.  I bought my homepod there because I can get the points on their Citi My BB card. They price match with Amazon which is nice,  because sometimes I don't want to wait two days for an item via Prime, I like my instant gratification. :wink:

     Also BB has free shipping on most things. I would never buy my phones through them, especially after that price gauge crap with the iPhone X.. For other things though I don't think they are that bad. 

    I am not sure where you are shopping that you don't pay tax, but for Amazon and BB I pay tax as they ship from my home state.
    Taxes online vary state to state. Here in NY, of course you have to pay taxes because if there's an item sold in NY you pay tax. I think you pay a tax for sneezing in NY. /s 

    But I think most states don't charge tax with amazon purchases. You're supposed to claim them on your taxes or something instead (yeah like everyone does that!) This is why you see AI advertise reduced pricing on Macs on B&H and sites like that with no tax, but then note only with 48 states.
    I got my 12.9" iPad Pro late last year at B&H!!!  We get taxed from Amazon these days in California.  CA wanted their money and got their way with Amazon.   I think there's a BB Mobile store in my Mall, along with a full Best Buy store which also is selling phones.  Never made sense to me.  Besides, I always just get my phone online from the carrier I'm signing up service too.  I've never walked into a store to buy a cell phone.  Not even back in the dumb phone days.

    yeah it might be California and NY that charge taxes. I know there was at least one other state that requires Amazon to charge taxes (and most likely other online retailers). NY and Cali are very tax happy!
    Amazon collects sales tax in 45 states now. I was so bummed when they started charging sales tax here in California. 
    Government ensures there will always be a steady stream of tax revenue to keep them employed... "Job security".
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