The company will 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 big Currys PCWorld stores and online.
The small standalone stores, representing 8% of Dixons Carphone’s total UK selling space, will close on 3 April 2020. The business expects almost 40% (1,800) of affected colleagues to take new roles internally, but sadly expects 2,900 redundancies as the businesses are brought together. Dixons Carphone will go well beyond legal obligations in financial and other support for all affected colleagues. There’s never an easy time for an announcement like this, but the turbulent times ahead only underline the importance of acting now, to ensure a business fit for the future.
Today’s announcement is an essential next step in Dixons Carphone’s turnaround of its Mobile business as part of its strategy outlined in December 2018, to return this part of the business, which will make a £90m loss this year, to profitability. Customers are changing the way they buy mobile devices and connectivity, replacing their handsets less often and buying them separately or as part of more flexible bundles.
The company has taken action in response, including renegotiating its legacy volume commitments with the mobile network operators: these will continue to roll off during FY21. As a result, the Group will no longer be encumbered by historic sales volume targets. We will 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.
Customers are also increasingly choosing to shop, not only with our large and growing online business, but also in the company’s big 3-in-1 stores, featuring Currys, PCWorld and Carphone Warehouse, which continue to grow market share and where customer satisfaction is sharply up. These stores, which are 20 times larger than Carphone Warehouse standalone stores, allow customers to see, touch and play with technology (electricals as well as mobile, services as well as products) and receive trusted independent advice from 17,000 expert store colleagues, all in one place. The business has been investing tens of millions of pounds in these stores.
Dixons Carphone also remains committed to the mobile category. Current Carphone Warehouse customers will be able to enjoy the same expert service in the big stores. The mobile offer will continue to be available online – including at carphonewarehouse.com – and through phone sales teams. Later this year, the business will launch its new mobile customer offer. This will better reflect what customers want: flexibility, transparency, and value. This will include deals they can’t find anywhere else, nationwide face-to-face advice, the best range of handsets from the biggest brands and a wide range of tariffs and networks, underpinned by a market-beating price promise.
The changes being announced today do not affect the 70 Carphone Warehouse stores in the Republic of Ireland or any operations internationally.
Alex Baldock, Group Chief Executive
“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 £90m 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.
“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.
“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.”
