Via Financial Times

Vodafone is to shut 1,000 shops as part of an overhaul of its retail estate.

The telecoms company operates 7,700 stores across Europe but wants to change its role on the high street to reflect changing consumer behaviour.

Nick Read, chief executive, said it also expected to transform roughly 40 per cent of its stores. That could involve upgrading existing shops to larger formats or downgrading them to kiosk-like “click-and-collect” outlets where consumers can pick up pre-ordered items.

He said 15 per cent of the company’s stores would shut within two years as a result of the overhaul.

“If you believe 40 per cent of your transactions are going to be digital, then how does that impact why someone goes to a store? The journeys and purpose of the stores changes,” he said.

The plans will not, however, reduce the number of stores in the UK. Vodafone’s UK arm said last month it would spend £5.5m opening 24 new franchise stores, creating 100 jobs, with another 50 due to be opened next year. It has 400 stores in the UK.

Although independent mobile phone retailers, including Carphone Warehouse and the collapsed Phones4u chain, have struggled as customers shift to buying handsets online or direct from the manufacturer, there has been little sign so far of the networks themselves shutting the thousands of stores they operate.

One former telecoms executive said the profitability of stores was likely to have declined in recent years, but they were still an important customer service channel, giving the networks an opportunity to market services such as home broadband and more expensive calls packages.

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“In terms of ability to acquire new customers, the ones you acquire through your own stores are generally the most profitable because there is much less commission paid to middle men,” he added.

On UK high streets in particular, network operators are likely to be benefiting from falling rents. Other tenants, such as fashion group Next and stationer WHSmith, have reported securing average rent reductions of a quarter or more upon renewing leases.

Carphone Warehouse, which connects roughly a fifth of all mobiles sold on contract in the UK, has closed some stores but its chief executive remains committed to keeping most of its 600 standalone shops open.

Mr Read said Vodafone’s retail overhaul had been driven by data analytics after a trial in Spain. He said combining data from customers, the company’s finances and sources such as Facebook meant Vodafone could better understand how people want to use its stores, with many opting to use its app and chatbot for customer service.

“I ultimately know a lot about what you do. I know whether you are willing to go one mile to a store or half a mile to a store,” he said.

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