Dixons Carphone has announced it will be shutting all 531 Carphone Warehouse (opens in new tab) retail stores and make 2,900 staff redundant in the latest stage of its business transformation.
The standalone stores represent eight per cent of the company’s total retail footprint, however Carphone Warehouse concessions in larger Currys PC World stores will continue to operate.
Another 1,800 staff will be found roles elsewhere in the company, which has stressed that it will “go beyond” its legal obligations for financial and other support to those who lose their jobs. The total cost of the restructure will be £220 million and the closures will take effect on April 3.
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Carphone Warehouse closure
The company is the UK’s latest mobile phone retailer but has struggled to cope with changing consumer habits. A saturated market and longer refresh cycles are lowering contract renewal rates, making SIM-Only tariffs and SIM-free handsets more popular, squeezing margins.
CEO Alex Baldock is currently leading a transformation of the business, expressing a desire to “reset” Dixons Carphone’s relationship with operators so they are more sustainable and believes that combined with plans to improve its technology, train staff and offer credit services, the firm can revitalise its mobile business and drive online sales.
Dixons Carphone said the smaller stores cannot meet these changing demands and that its larger stores, which offer wider range of technology, and its online platforms (opens in new tab) will better serve customers.
However the absence of a high street presence will limit some customers access to independent advice. Rival Phones4U was liquidated in 2014.
“Clearly, with unsustainable losses of £90m expected this year, Mobile is currently holding back the whole business,” said Baldock. “There’s never an easy time for an announcement like this, but the turbulent times ahead only underline the importance of acting now.
“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.
“So customers are increasingly heading, not just to our large and growing online business, but into our big stores, where they can find all the experts and tech - mobiles, computers, TVs, smart tech, appliances, gaming and all the rest - they need. But 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.”
Baldock added that renegotiated contracts with mobile operators meant that Dixons Carphone was no longer constrained by historic sales volumes. It is hoped that the changes will allow the mobile business to break even by 2022. The closures do not affect Ireland or any of the company’s international markets.
“We are sorry to hear of the store closures and the impact it has on people’s jobs," said a Vodafone spokersperson. "Today’s news does not directly affect us or on our ability to keep the UK connected during these difficult times.
"Dixons Carphone have confirmed their 305 shop in shop locations and all their online businesses remain unaffected by the announcement. These channels will continue to supplement our own online channel and high street presence of around 500 Vodafone stores, including an expanding franchise operation.”
TechRadar Pro has contacted the other major operators for comment.
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