Dixons Carphone is to close its 531 standalone Carphone Warehouse stores in the UK, and focus on selling mobile devices and connectivity through its shop-in-shops in 305 Currys PCWorld stores and online.
The small standalone stores, representing 8% of Dixons Carphone’s total UK selling space, will close on the 3rd of April 2020. The business expects almost 40% (1,800) of affected colleagues to take new roles internally, but expects 2,900 redundancies as the businesses are brought together. Dixons Carphone said it intends to “go well beyond legal obligations in financial and other support” for all affected colleagues. Management believe the changes are necessary to to ensure the business is “fit for the future”.
They described the move as an essential next step in Dixons Carphone’s turnaround of its mobile business as part of its strategy outlined in December 2018. The strategy aims to return this part of the business, which will make a £90 million loss this year, to profitability.
The company has also been renegotiating its legacy volume commitments with the mobile network operators: these will continue to roll off during FY21. As a result, the company will no longer be encumbered by historic sales volume targets. Dixons Carphone management said it will now provide an offer that reflects how customers are buying technology today and prepare for an even more connected 5G future that goes well beyond the mobile phone.
Alex Baldock, Dixons Carphone chief executive, said: “Customers are changing how they buy technology, and Dixons Carphone must change with them. We’re underway with a fundamental transformation to do so. Today’s tough decision is an essential part of that, the next step in making our UK Mobile business a success for customers, colleagues and other shareholders. Clearly, with unsustainable losses of £90 million expected this year, mobile is currently holding back the whole business. 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. We want to keep as many of our Carphone Warehouse colleagues as we can, and expect to find new roles for almost 40% of those affected. We’re working hard to look after those colleagues we can’t find new roles for, financially and otherwise. We’ll pay enhanced redundancy, any bonuses, honour their share awards, and help them find new jobs through an outplacement programme. We recognise our responsibilities towards our colleagues and communities, and intend to fulfil them.
“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.”
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Customers are increasingly heading, not just to Dixons Carphone’s large and growing online business, according to Baldock, but into its large stores, “where they can find all the experts and tech – mobiles, computers, TVs, smart tech, appliances, gaming and all the rest – they need”. But, he added, they cannot find all this in the small mobile-only stores that are one 20th of the size.
“They are visiting these less and these stores are losing more money as a result,” said Baldock. “That’s why we’re committed to our more than 300 big stores around the UK, why we’re investing tens of millions of pounds in them and in the thousands of expert colleagues who work in them. But it’s also why sadly we have to close the small stores.
“We remain committed to mobile, as we’re showing by developing a new offer for customers, retaining as many Carphone Warehouse colleagues as we can, and making mobile a core category in our big stores and online. As such, mobile will be part of the one, joined-up business that customers want and that’s essential for our transformation. Today’s announcement is about ensuring we’re ready for that future, and staying on track for future success.”