Phone retailer and telecomms firm O2 is to close 40 of its 493 stores this year and instead invest in its best performing shops.

39 of the affected shops will be closed by April and the last one by August. The stores to be shut are among its smallest and closures will be based on performance and expiring lease agreements. There were no plans to open more stores this year.

250 roles will be made redundant and the majority of staff holding these positions will be redeployed. O2 will also create 250 technology customer service advisor roles to improve customer experience, and the overall effect on employment will be neutral.

An O2 spokeswoman said there are no plans for redundancies, but staff may choose not to be reallocated to other roles. She said that the decision to close stores was not based upon underperformance. Rather the intention is to create an excellent retail experience for customers.

O2’s store closures follow HMVs decision to shut 60 shops and as many high street properties stand empty. A third of Woolworths’ 800 former stores are still empty two years after the shutters came down.

O2 said it will invest in its best performing shops.100 stores will be refitted to the latest format including live handset displays, gaming lounges and the O2 Guru Bar, where customer service technology advisors help shoppers. At present the model has been adopted in 128 stores.

O2 also revealed a three-tier store categorization based on customer footfall and the services and expertise required. Staff pay and reward will now reflect their experience, responsibility and the type of store they work in.

O2 said that in the majority of cases there will either be no change to or an increase in current reward levels.

O2 Retail general manager Richard Baylis said: “Our increased investment, store redesign and introduction of 250 extra ‘gurus’ will really help make sales and service inseparable for the customer and subsequently deliver a better experience.”