Telus buys smartphone repair chain MobileKlinik in bid to help keep churn down

For fast-growing Mobile Klinik, being located in malls is critical.

Most retailers are grappling with the fallout from the COVID-19 pandemic and many are shutting stores. But Mobile Klinik, a chain that repairs smartphones, is on a growth spurt.

The company, which was recently acquired by Telus Corp. for an undisclosed amount, has plans to more than double its existing footprint of 81 stores, and the backing of a major telecom provider will accelerate its pace, chief executive Tim McGuire said. Instead of adding 30 to 40 new stores a year, Mobile Klinik will be able to add 50 or 60, allowing it to more quickly reach its goal of being in every community of 30,000 people or more.

“You can imagine that real estate landlords today are not getting very many calls from retailers saying, ‘Can you please give me some more stores, I want to lease more space in your malls,‘” Mr. McGuire said in an interview. A number of retailers have been closing locations, as pandemic shutdowns exacerbated financial pressures and moved shoppers online.

But for Mobile Klinik, the country’s largest same-day smartphone repair chain, being in malls is critical. “It’s the centre of the telecom industry in Canada,” Mr. McGuire said. “As long as the carriers continue to sell the vast majority of their plans in malls, we need to be where they are. Because the consumer behaviour is that as soon as someone breaks their phone, the first thing they do is go back to where they got it.”

Mobile Klinik’s growth is fuelled by rising smartphone prices, which have prompted consumers to hold onto their devices longer and created a market for refurbished used handsets. Roughly half of Telus’s customers are now keeping their devices for three or more years, according to Jim Senko, the telecom’s president of mobility solutions. Being able to repair those customers’ phones is critical to keeping churn – the rate of customer turnover on a monthly basis – low, Mr. Senko said.

“Repair really is becoming an essential service,” Mr. Senko said, adding that Mobile Klinik has seen store traffic rebound faster than many other retailers as lockdown measures have lifted. “People still have devices that they need to get fixed and have in working order. It’s really a service that has weathered the storm.”

For Telus, the acquisition also offers an opportunity to shift device repair work that’s currently being done in its own stores over to Mobile Klinik, freeing up Telus employees to focus on selling wireless, home internet or television plans, Mr. Senko said.

Mobile Klinik, meanwhile, is hoping to benefit from higher referral traffic from Telus, both for repair services and for its refurbishing operation. Telus currently sells refurbished devices and offers a trade-in program that allows customers to get store credit for their used phones. Combining those programs with Mobile Klinik’s refurbishing business could help expand the growing market for used phones, both companies said.

“Our goal is to be Canada’s used phone superstore, and access to the Telus trade-in customer pool gives us the opportunity to really ramp up those numbers quite rapidly,” Mr. McGuire said.

Mobile Klinik was founded in 2015 by a pair of veteran Canadian telecom executives, Ken Campbell and Rob Bruce, as well as entrepreneurs Alain Adam and Naaman Zorub. (Mr. Campbell was once the CEO of startup Wind Mobile, now owned by Shaw Communications Inc. and called Freedom Mobile, while Mr. Bruce is the former head of wireless and cable at Rogers Communications Inc.)

Since then, Mobile Klinik has acquired three of its competitors: Edmonton-based mobilFIX, which it bought in 2017; Device Care, a chain with seven locations across Ontario and Quebec that it acquired in 2019; and Ontario-based fonelab, snapped up earlier this year.

Mobile Klinik – which repairs devices while customers wait, often in less than an hour – now has locations in all but two provinces. It will be opening its first store in Nova Scotia in September and its plans for Prince Edward Island are under way.

This article by The Globe and Mail was published July 16, 2020.

Read the full article at: https://www.theglobeandmail.com/business/article-telus-buys-smartphone-repair-chain-mobileklinik-in-bid-to-help-keep/