Carphone Warehouse closes 11 Best Buy shops

Despite being one of the most popular US retailers of mobile phone and electronic goods, Best Buy has failed to turn the heads of UK customers. Carphone Warehouse has confirmed it is to close 11 Best Buy shops across the UK, which it jointly owned with the US company.

The move could result in the loss of up to a thousand jobs if alternative roles are not found for employees of the Best Buy stores. The shops were part of a joint operation between the American electronic giant and the British mobile phone brand which formed Best Buy Europe. The first stores opened only in April 2010 but they have struggled to etch out a profit in a competitive market and a depressed economy.

The 11 Best Buy outlets are located in Rotherham, Southampton, Thurrock, Liverpool, Dudley, Derby, Bristol and Nottingham plus three stores in London.

The joint venture of Carphone Warehouse and Best Buy was launched with confidence and expected to grow quickly to more than 200 outlets across Europe, but the project has been abandoned owing to continual unimpressive sales. It is a far cry from Best Buy’s US success where it is a major player in the market, influencing pricing in other high street stores and impacting on consumer choice.

The Best Buy Europe venture began in earnest in 2008 after Best Buy bought a 50% stake in Carphone Warehouse for  £1.1 billion. The focus will now turn to selling more electronic products through the Carphone Warehouse’s existing network of more than 800 stores in the UK and 1,500 plus in Europe.

A spokesperson for Best Buy Europe said: “As a result of the global downturn since 2008, the consumer electronics market has undergone substantial change. This has impacted on the sales and development of key products such as tablets, smartphones and apps.”

Also, as part of Best Buy’s new strategy to rid itself of unprofitable ventures, plans have been laid down to buy out Carphone Warehouse from a separate mobile phone joint project for around $1.3 billion. The US venture has proved to be far more fruitful for the two companies as sales of smartphones such as the Apple iPhone and the Samsung Galaxy SII have soared.

After the story was leaked recently and rumour abounded, Carphone Warehouse confirmed the decision this week citing a first half of the year decline in profits.

The failure of the CPW and Best Buy venture has shown that what works in the retail business in the US may not be successful around Europe. Despite the setback, the partners confirmed that did still plan to do business together globally under a new brand of “Global Connect”.

Meanwhile 400 of the smaller Carphone Warehouse stores are to be converted to “Wireless World” outlets and will be allowed more shop floor space and greater variety of stock. The companies hope that this formula will be better suited to UK customers.