Nokia set to shut US flagship stores

Helsinki : Nokia will close its two flagship stores in the US, saving costs on a market where the world's top cellphone maker is struggling to gain ground.

Nokia is also closing one of its two stores in London and its Sao Paolo store.

Nokia has opened 12 stores in major cities around the world, hoping to copy the success of Apple's retail stores, which have helped the US gadget maker to boost its premium brand image.

Nokia's brand is one of the most highly valued globally, but mostly thanks to its strong role across the emerging markets, and it is little known in the United States.

Turning point

Nokia said it would close the stores in New York and Chicago as part of its retail strategy revamp to better focus on co-operation with telecom operators and with retailers.

"This confirms a turn in Nokia's retail strategy. It has failed to replicate Apple's success with this format of store," said Ben Wood, director of research at British consultancy CCS. Nokia opened its first flagship store in Moscow in December 2005.

Improving the company's position in the US market has been a priority for Chief Executive Olli-Pekka Kallasvuo since he started to run Nokia in 2006.

Since then, however, the company's US market share has fallen to well below 10 percent. Globally, Nokia controls nearly 40 per cent of the mobile phone market.

Analysts say these branded retail outlets are more marketing tools than growing sources of profit.

High costs

"There is no reason for Nokia to have the flagship stores — they cost too much compared to the value they create," said John Strand, chief executive of Danish consultancy Strand Consult. "Flagship stores are important in fashion industry: Apple is fashion. Nokia is consumer electronics," Strand said.

Apple launched its store chain in 2001 and now runs more than 270 shops around the world. Microsoft recently followed suit and opened its first retail outlet in Arizona.

Shares in Nokia were 1.3 per cent higher at 8.66 euros by 0907 GMT, roughly in line with strong DJ Stoxx European Technology Index.