Contingency plan helps Wind Mobile weather Blockbuster closures

After its retail partner Blockbuster Canada announced it would be closing many of its locations across Canada, you might expect that Wind Mobile would be in trouble.

But fortunately for the wireless carrier, it already had a contingency plan in place. When its parent company in the United States announced it was filing for bankruptcy in November 2010, Blockbuster Canada told its partners here that it was “business as usual,” says Anthony Lacavera, Wind’s chairman.

“We were not convinced,” he says, and Wind began contingency planning right away. The strategy worked out well, since Blockbuster Inc. announced it was closing nearly 150 of its locations around Canada on May 26. The company was pushed into receivership earlier this month and will now be sold to pay off roughly $70 million of debt to U.S. movie distributors.

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Following the U.S. bankruptcy announcement, Wind began building additional stores and kiosks close to its existing Blockbuster stores-within-stores.

It was an arrangement that Lacavera says he prefers. “We’ve actually got better locations,” he says. “I’d prefer to have a branded store,” he adds. “A lot of the [Blockbuster] locations were grab-and-go point of sale,” he says. “We didn’t have very good exterior signage,” he says.

Now, the company has more staffed, branded locations. “We’ve been able to improve our street level visibility,” he adds. Wind will also continue its partnerships with other retail outlets, like London Drugs, which has a large presence in western Canada.

Wind’s sales from its Blockbuster locations peaked last summer at about 20 per cent of total sales, according to Lacavera. “It started declining as we opened more of our own stores,” and now the percentage is “negligible,” he says.

“We’re assuming that we have zero Blockbuster locations,” he says. He says he is convinced that the list of closures will be continue to grow.. “From what we can tell, some of the one’s they’re closing are some of their most high traffic locations,” he says.

Lacavera, however, does not think that the Blockbuster stores would matter much to Wind’s retail footprint. “I don’t anticipate any impact on Wind Mobile,” he says.

There has been speculation in the industry that Wind could potentially buy Blockbuster and continue selling, the same way that Telus Communications does with its Black’s Photography stores or Bell Canada does with the Source.

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“We’ve looked at it a number of different ways. At this particular time, no,” he says to the idea of buying the ailing company. “There was a time when we had it in our business plan,” he says. Now though, “we are past the point of there being strategic value now,” he says.

Telus’ partnership with Black’s is a significant one, says Bruce Herscovici, senior vice president for the consumer solutions channel at Telus. “It’s equally important,” to the company’s relationship with other stores known more for selling phones and wireless plans, he says.

Telus acquired Black’s Photography Corp. in 2009 simply because it was a good investment. “That particular opportunity seemed like the best opportunity,” he says. He could not provide a specific percentage for sales from Black’s, but he says it is significant.

“In the case of ownership, we have a much better opportunity to help bring to life our value proposition in the context of that business,” he says, but each retail partner has its value.

“Consumers have their preferred channels,” he says. A store like Black’s appeals to customers who have loyalty to that store, whereas some consumers prefer stores like Future Shop where there is a perception of greater choice, he says.

Grant Thornton LLP, the business advisory firm tasked with selling Blockbuster, has not yet released any other potential suitors for the company.

Harmeet Singh is a Staff Writer at ITBusiness. Follow her on Twitter, and join the IT Business Facebook Page.

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