April 19, 2024

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Carphone Warehouse to close all standalone stores at cost of 2,900 jobs

Woman walks past Carphone Warehouse store
Woman walks past Carphone Warehouse store

Carphone Warehouse is to close all its 531 standalone stores on 3 April, resulting in 2,900 redundancies.

The firm says the move is not related to the coronavirus outbreak, but was because of the changing mobile market.

The mobile phone retailer has shops inside 305 big PC World and Curry’s stores and these will not be affected by the changes.

Almost 40% of staff (1,800) affected by the closures are expected to take new roles in the business, the firm said.

Group chief executive Alex Baldock said customers were increasingly buying online and from its big stores – which sell computers and TVs as well as mobiles – instead of its smaller, standalone mobile shops.

“They can’t find all this in the small mobile-only stores that are one-twentieth of the size; they’re visiting these less and these stores are losing more money as a result,” he added.

‘Essential next step’

The company’s standalone stores represent 8% of Dixons Carphone’s total UK selling space.

It says the move is “an essential next step” in turning around its mobile business as part of a strategy outlined in December 2018.

The aim is to return this side of the business, which will lose £90m this year, to profitability.

Talking about the job losses, Mr Baldock added: “I don’t underestimate how upsetting this news will be for our colleagues, and we’ll treat everyone with honesty, respect and care.

“But though this is by far the toughest decision we’ve had to make, it is necessary. We must follow our customers. They want help with all technology, all in one place, and this trend is only going to accelerate in a more connected 5G world.”

Speaking to the BBC’s Today programme, he emphasised the decision was nothing to do with the coronavirus outbreak.

“The coronavirus and uncertain outlook ahead has underlined the importance of acting decisively, but no, the driver here is what we’re seeing from customers,” he said.

“We have to take the difficult decisions to throw our weight behind the parts of the business that the customers are showing us they want… that’s with the big stores and that’s online.”

Analysis box by Dominic O'Connell, business correspondent
Analysis box by Dominic O’Connell, business correspondent

Selling electrical gadgets on the High Street has been a tough game ever since internet retailers got into gear a decade ago.

Tough competition from the likes of Amazon sparked the deal that created Dixons Carphone in the first place – the 2014 merger of Carphone Warehouse and Dixons Retail. The plan was that the merged entity would have the financial muscle to make a decent fist of selling online, and save millions by rationalising the two companies’ retail estates.

That did happen, but the bricks and clicks plan was too ambitious. For Dixons Carphone, mobile retailing loses £90m a year, so further retrenchment was inevitable.

There will be questions about the timing of the announcement – on a day when so many are distracted by the wider impact of the coronavirus, few will notice the news that 2,900 staff are to lose their jobs.

Dixons Carphone, though, will point to the inevitability of the closures, given the continued losses, and the increasing share of the market being taken by internet players.

The people who are losing their jobs face a desperate few months – few retailers were hiring, and now the coronavirus has put most other potential hirings on hold.

Dixons Carphone added that it remained committed to mobile and said customers would receive the same expert service in its big stores as in the standalone shops.

It added that it was launching a new mobile offer later in the year and everything would still be available online.

Kester Mann, from market researchers CCS Insight. told the BBC: “Carphone Warehouse has been caught in the unfortunate crosshairs of lengthening mobile phone replacement cycles and ongoing apathy on the UK High Street.

“It has been clear for some time that something had to give in its business. A greater focus on online sales is a logical move.

“With more than twice as many people expected to keep their current mobile phone for longer than their last one, footfall has declined and mobile phone retailing is tougher than ever. Carphone Warehouse had no option but to make some major changes.”

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