Best Buy removes carrier-branded ‘stores-within-stores’ at some locations

Best Buy has removed its carrier-branded stores-within-stores, displays and desks at some locations, according to the latest postpaid report from Wave7 Research.

Jeff Moore, principal analyst at Wave7, told FierceWireless the changes started in mid-March. Wave7 has documented the removal of carrier “pods,” as they are sometimes called, in three stores in various locations across the country. “What we currently do not know is what percent of Best Buy stores have had the change,” Moore said. “We’ve checked six stores in the last few weeks, and three of them had the change.”

Best Buy has removed the large carrier-branded signage and tables for Sprint, Verizon and AT&T at the three locations. Moore said the company appears to be arranging phones by manufacturer, rather than carrier, at the three stores in question. “It’s a major conceptual change, from my perspective,” he said. “There is no major branded presence for postpaid carriers in these Best Buy locations. In the stores that have had the change, you can still activate phones for AT&T, Verizon and Sprint, but the carrier at these stores seems to be an afterthought. The emphasis seems to be on phones, on the OEMs themselves.”

A Best Buy location in Kansas (Wave7 Research)

He added that the stores are instead showcasing unlocked mobile phone models, with pricing listed for activating each phone on one the three carriers. “You almost need a magnifying glass to see, ‘oh yes this phone will activate with AT&T’,” he said.

The change represents a major shift in how phones are marketed to consumers. Traditionally in the U.S., consumers pick a carrier and receive a phone as part of the voice and data plan. But competition in the mobile sector has changed how consumers shop for phones.

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“There is a slow evolution towards greater use of unlocked phones and away from just getting whatever phone the postpaid carriers recommend,” Moore said.

It also represents a new tactic for Best Buy in mobile phone sales. The company has previously had close relationships with carriers and allows carrier employees to work at Best Buy’s mobile division. “Verizon may pay for a rep to walk around in a blue shirt, but he’s there to pitch Verizon goods and services,” Moore said.

The new layout could serve to open up mobile phone market to more device makers, Moore said. “When you purchase a phone from the postpaid carriers, the overwhelming majority of customers buy one of two brands,” he said, pointing to Apple and Samsung. The new layout “really opens up the U.S. OEM market,” he added.

It’s unclear if the change is the result of Best Buy’s evolving relationship with mobile phone makers, or whether the new layout will expand to more locations. Best Buy did not respond to a request for comment on the changes.

The company reported lower-than-expected sales in mobile phones for the fourth quarter of 2019, as well as loss of revenue from 257 Best Buy Mobile locations and 12 large format store closures in the past year. Best Buy executives said those results were in line with wider trends in mobiles sales as the market hits saturation.

“This is more just a question of broadly how often are people buying what are now pretty trendy phones and replacing them,” said CFO Corie Barry during the earnings call, according to a transcript from Motley Fool. “We've been pretty consistent on our expectations for the mobile business over the last couple of years.”