In memory of Phones4U
In my village, the bright-red signage is above the frontage on the corner of the high street, near other threatened businesses such as the Post Office (with its continual swathe of proposals to close branches followed by appeals to keep them open) and the local café (soon to be superimposed by the shadow of the colossus that is Costa). It’s come as a surprise to some that Phones4U has gone into administration, but with the network operators’ ever-increasing high street presence and direct-to-consumer behaviours, telesales and upgrades/retentions teams, should the demise of one of the UK’s very few independent network-agnostic mobile phone retailers really be a shock?
The company’s foundations were sewn in 1987, when John Caudwell and his brother Brian founded Midland Mobile Phones and began to wholesale mobile phones to the UK market. The company then went through a series of transformations, partnerships and acquisitions to grow to the large high-street presence it has started its retreat from today.
During its growth, as with any large company, a number of spanners have been thrown in its wheels during its journey: in July 2010, the company began a partnership with appliance and electrical goods retailer Dixons to place 49 concessions inside a small number of Currys and PC World stores. The concessions were successful, and locations grew to over 100. However, following a merger between Dixons and Phones4U’s highstreet rival Carphone Warehouse, the agreement was not renewed and the concessions were removed.
The company’s reputation wasn’t perfect, either: it became known as a point of poor customer service (since its clients often had to deal with Phones4U regarding issues rather than being able to talk to the networks directly), and high levels of staff turnover were also reported, damaging morale and increasing staff retention and retraining costs.
In November 2008, Ofcom, the telecommunications regulator, fined Phones4U for misleading customers over network coverage, for having unfair terms on its cashback schemes, and for failing to provide timely refunds for faulty handsets. And regarding another regulator, the ASA, there were also a number of marketing campaigns that didn’t fare particularly well with the population: the one where it pointed fun at a Scout leader for “probably” not having more than 50 friends on his phone, and where it was accused of belittling Christian values by using a cartoon-style Jesus, holding a “miraculous” sign, winking and brandishing a thumbs-up.
With all that in mind, its marketing did capture the minds of a lot of people. The phones-for-you hand gestures, that spooky advert (you know the one), and its bright red signage all sticks in your mind. So what actually went wrong?
The straw that broke the camel’s back came when networks EE and Vodafone decided, almost simultaneously, not to renew its supply contracts with the company. It was at this point which, according to the press, caused Phones4U to bring in the administrators and pause trading. Its online outfit Dial-a-Phone went offline, the main Phones4U website went offline, and, although retail staff continue to be paid for now, high street shops were shuttered.
“Phones 4u received unequivocal legal advice that the business had no other option than to seek the appointment of administrators from PwC,” a company spokesperson told IT news rag The Register.
Perhaps the skeletons were already falling out of the closet, and the appointment of the administrators will confirm this? However, what’s more likely (in this author’s opinion) is that it is just part of the continuing sea-change to online, telephone and other direct-to-consumer distance selling. The Post Office and Royal Mail found solace in parcels (gone is the “Think of a letter” campaign, for instance) and even though other online outlets such as buymobilephones.net are able to compete, it is more than likely due to referrals, word of mouth, low prices and corresponding low overheads.
This, combined with its high-pressure sales tactics, negatively-perceived marketing campaigns, poor customer service and… well, you get the point. Perhaps it was just the death of another high street giant; another in an ever-increasingly long line of familiar household names such as Woolworths, to bite the dust, or perhaps it was an appropriate sentence for an out-of-date and no longer appropriate business.