The Sunday Times and Daily Telegraph are reporting today that British phone retailer Carphone Warehouse is about to close down the 11 Best Buy stores it opened across the UK last year. Things started off rather brilliantly for the transatlantic joint venture in May of 2010, when the Thurrock store broke the opening weekend sales volume record for a new Best Buy outlet, but consumer interest clearly hasn't kept up since then. That initial surge of demand was fueled at least in part by rock-bottom pricing intended to entice customers through the door, which clearly worked at first, though subsequent attempts to balance out the price-to-cost equation have proven unsuccessful. Having tallied a loss of £83 million so far, the operation of these 11 Best Buy outlets is being subjected to a "strategy review" by the Carphone Warehouse Group's top brass, with negotiations purportedly going on through the weekend. Carphone Warehouse has released the following statement in response to today's reports:
"We always said we would open 11 stores and then conduct a strategy review. We are now conducting our evaluation with our partners and will provide an update in due course."
The expectation is that CWG will announce the closure of the big stores when making its half-year fiscal report on Tuesday, although the partnership with Best Buy is unlikely to be extinguished entirely. Small Best Buy sub-stores are being mooted for introduction inside Carphone Warehouse locations, and there's also the Best Buy UK website, whose future doesn't seem to have been determined as of yet. Whatever the outcome, the gloomy situation for this partnership won't make happy reading for UK consumers looking for price competition among their high street electronics shops. The Dixons Retail group controls most of the big chains, with only Comet offering any competition to speak of. Carphone Warehouse made its big push to enter that race through its agreement with Best Buy, and its apparent failure so soon after the launch illustrates rather well how hard it'll be for anyone else to disturb the current duopoly.
Update: The BBC and Reuters have received confirmation of this decision from the two companies and are reporting that they will indeed shutter the 11 stores in question. Additionally, Best Buy will be buying out the Carphone Warehouse's stake in the Best Buy Mobile venture — which has been doing very well in the US, in stark contrast to their collective efforts in the UK — so as to avoid having to share profits from it in the future.