(TheVerge)– BestBuy has announced it will shut all 250 of its small mobile stores across the US by May 31st. The stores reportedly contributed only a little over 1 percent to the company’s overall revenue. The closures won’t affect BestBuy’s mobile stores in Canada, and the company will continue to sell mobile phones both online and in its “big box” stores.
BestBuy began opening the dedicated mobile phone outlets about ten years ago, before the first iPhone was released. The mobile stores are tiny, averaging 1,400 square feet — compared to full-size stores, which average 40,000 square feet. BestBuy’s mobile shops are also competing with wireless carriers who have their own hight street stores as well as Apple and online retailers like Amazon.
In an internal memo seen by Reuters, Chief Executive Hubert Joly told employees that margins at the stores had “compressed” and that “the cost of operations in our mobile standalone stores is higher than in our big box stores.” About 85 percent of BestBuy’s mobile shops are located within three miles of big box stores, the memo noted.
BestBuy will reportedly help redeploy employees to other parts of the company over the next three months, but did not say how many would be affected. Those who leave after May 31st will receive severance packages, and BestBuy will help them with external job searches.
This isn’t the first time a shift in the retail market has sparked a change in BestBuy’s strategy. Last month, the company announced it would stop selling CDs in stores as digital music revenue continues to grow.