Nokia to Close Flagship Stores in New York, Chicago, London, São Paulo

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Nokia has decided to close its flagship stores in New York City, Chicago, and São Paulo, as well as one of its two locations in London after failing to find the same success with retail locations as Apple did with its own fleet of Apple Stores. Reuters reported that the company decided to do so as part of a revamping of its retail strategy.

"This confirms a turn in Nokia's retail strategy. It has failed to replicate Apple's success with this format of store," Ben Wood, director of research at the UK consultant firm CCS, told Reuters.

John Strand, chief executive of Danish company Strand Consult, added that the flagship store approach was never right for Nokia, telling Reuters, "Flagship stores are important in fashion industry: Apple is fashion. Nokia is consumer electronics. There is no reason for Nokia to have the flagship stores -- they cost too much compared to the value they create."

Nokia is the world's largest manufacturer of cellphones with 38% global market share during the September quarter of 2009, selling approximately 108.5 million handsets around the globe. In comparison, Apple sold 7.4 million iPhones during the same quarter, but, as we reported on November 10th of this year, Apple generated US$1.6 billion in operating profit from the iPhone, while Nokia generated some $1.1 billion on its 108.5 million units.

Nokia sued Apple in October, accusing Apple of infringing on several of Nokia's patents relating to cellphones, and some analysts expect that Apple could countersue over its own portfolio of patents relating to multitouch gestures.

In the meanwhile, Nokia is working hard to improve its share of the U.S. cellphone and smartphone market, where it has but 10% market share, despite its dominating presence in Europe and Asia. So far, high-end flagship stores have not helped in that area, though Nokia told Reuters it would keep the other eight locations of the original 12 around the globe open.

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