AT&T closing nationwide Phone Center stores
PARSIPPANY, N.J. -- January 24, 1996 -- AT&T's Consumer Products unit announced today it will distribute its products only through national, regional and catalog retailers and communications service providers, and will close its own nationwide chain of AT&T Phone Center stores.
The 338 stores, located mainly in malls and retail districts in major metropolitan areas across the country, sell and lease consumer and small business communications products, corded and cordless telephones, answering systems, cellular phones, and a wide range of telephone accessories. About five per cent of AT&T's long-distance customers buy products at the stores. The closings will begin in February, and will be completed as soon as possible.
Customers still will be able to buy AT&T telephone products at more than 17,000 outlets operated by other national and regional retailers such as Sears, Wal*Mart, Best Buy and Service Merchandise. Such retailers already account for about two-thirds of AT&T's telephone products sales annually.
Consumer Products also intends to begin private-label manufacturing for communications service providers, and has made its first sale of telephones to a local telephone company.
Consumer Products will be part of the systems and technology company that is expected to be spun off from AT&T later this year. Consumer Products is closing its own retail stores to improve profitability and strengthen itself competitively for the future. Job reductions and other costs associated with the closings were included in the restructuring charges AT&T announced January 2.
"We have decided to focus our business on what we do best, the design and manufacture of high-quality consumer communications products," said Homa Firouztash, Consumer Products' Vice President of Marketing, Sales and Product Management. "We believe larger retailers can distribute our products more efficiently than we can. And communications service providers offer us a new distribution channel.
"Consumer buying trends are changing as well, with specialty chains such as ours likely to face increasing pressure as customers shop more at large stores that carry a wide range of products.
"Consumers who have purchased at our stores can be assured, however, that AT&T will stand by them, honor all warranties, and will continue to deliver the high level of service they have come to expect from us."
AT&T also is taking action to maintain its superior service for customers who lease phones. The company is increasing by about 400 (bringing to about 1,000) the number of service agents authorized to support lease customers who want to exchange phones, lease new phones, or have products serviced. Service agents are independent, small-business operators trained by AT&T.
About 2,500 employees will be affected by the closings, including about 420 managers and about 2,050 union-represented employees. About 85 per cent of the union-represented employees work part time, and about one quarter have worked at AT&T for less than a year. All but about 50 of the employees work in the Phone Center stores as managers or sales associates; the remainder work in headquarters and distribution functions. Fifteen metropolitan areas have more than five stores, with an average of six employees working in each store.
"We very much regret the disruption that will result for employees and their families," Firouztash said, "especially since our employees have delivered the industry's best customer care and service. We are committed to supporting them in a number of ways through this difficult period."
Management and union-represented employees will be eligible for career transition support that includes training, career counseling, outplacement support, six months of medical benefits, tuition support, a leave-of-absence option for employees close to pension eligibility, and other benefits. Management employees who must ultimately leave the business will receive up to 35 weeks of pay depending on length of service, and union-represented employees can receive up to 104 weeks of pay depending on length of service.
Information already is included in all product packaging that tells customers how to contact AT&T with questions, how to obtain technical support, and how to return products for repair or service. In-warranty products needing repair can be mailed to AT&T. A replacement product will be shipped within 14 days. Customers may call 1-800-222-3111 with questions about repair or warranty service and to obtain the location of the nearest retailer offering AT&T products. Lease customers should call 1-800-555-8111 for any questions about their service or to obtain the location of the nearest lease service agency.
A Brief History
The AT&T Phone Center stores is a national retail chain for telephone and related equipment, originally created 25 years ago as a customer service channel for the then Bell System. Just before the Bell System's divestiture in 1984, there were over 1,000 stores nationwide; they were virtually the only places where one could obtain a telephone.
Upon the Bell System's divestiture in 1984, AT&T retained the stores and continued to operate them as retail outlets for its consumer products, including telephones and accessories, small business telephone systems, and computers. Currently there are 338 stores in 44 states, mostly located in shopping malls and downtown business districts.
The sizes of these stores range from 600 to 6,000 sq ft with most stores having between 1,600 and 3,500 sq ft. They typically carry about 2,000 stock items, ranging from phone cords, batteries and surge protectors to corded phones, cordless phones, cellular phones to fax machines and computer systems. A typical Phone Center store has a manager and five associates.
The first Phone Center store was established on an experimental basis in a high-rise building in the Hollywood- Hallandale area of Florida (near Miami). Shortly after that, Phone Center stores were rapidly deployed nationwide.
Initially, the stores were created as an adjunct to the Bell System's local business offices, where telephones of different styles and colors were displayed and where telephone subscribers could pick out the style and color they liked. Store personnel also taught customers how to rewire their phone jacks for "plug-in" phone installation. Since all phones were available only for lease at the time, the stores' main function was to service lease customers.
As subsequent legislations opened up telephone equipment for sales, more and more customers opted to purchase their own phones instead of leasing, and the AT&T Phone Center stores gradually became retail outlets for AT&T's increasingly diverse line of consumer and small business telecommunications products.
AT&T Phone Center stores continued to service AT&T's several million leasing customers. These customers can go to any Phone Center store to pick up the phones they like, return their leased phones for repairs, or exchange their phones for one of a different style or color. They can also buy their own phone, pay their leasing bills, and otherwise receive expert advice on telephones.
In fact, AT&T Phone Center stores became a familiar AT&T presence in many local communities. It is estimated that 12 million customers enter these stores each year. During the 1992 Gulf War, the Phone Center stores became local focal points in many communities when AT&T provided free fax service from them for messages going to U.S. service personnel in the Persian Gulf.
Of the 338 stores, half are located in 15 metropolitan areas. The top six states with the most stores are: California (41), New York (28), Texas (24), Illinois (22), Florida (21) and New Jersey (20).
Alabama.............. 4 Arkansas............... 1 Arizona.............. 6 California............. 41 Colorado............. 8 Connecticut............ 2 Wash., D.C. area..... 10 Delaware............... 1 Florida.............. 21 Georgia................ 9 Iowa................. 2 Idaho.................. 1 Illinois............. 22 Indiana................ 5 Kansas............... 2 Kentucky............... 2 Louisiana............ 4 Massachusetts.......... 11 Maryland............. 6 Maine.................. 1 Michigan............. 15 Minnesota.............. 3 Missouri............. 7 Mississippi............ 1 Montana.............. 1 North Carolina......... 8 Nebraska............. 1 New Hampshire.......... 3 New Jersey........... 20 New Mexico............. 1 Nevada............... 2 New York............... 28 Ohio................. 16 Oklahoma............... 3 Oregon............... 4 Pennsylvania........... 15 Rhode Island......... 1 South Carolina......... 2 Tennessee............ 5 Texas.................. 24 Utah................. 5 Virginia............... 4 Washington........... 6 Wisconsin.............. 3 West Virginia........ 1
Total stores 338 as of January 24, 1996. There are no stores in Alaska, Vermont, North Dakota, South Dakota, Hawaii and Wyoming.