Through the Loading Dock: The Fall of Phones4U

For years, Phones4U were the top dog in the world of independent mobile phone retailers.

Mobile phone retail is a small business to be in. Off the top of my head, there are only two other independent retailers in the local area to me, so it’s a small market to be in. There are plenty of dedicated mobile phone stores around the country, such as EE, O2, Vodafone, Virgin Mobile, Three and that’s without counting supermarket mobile stores like Tesco Mobile. But the independents have the advantage of being able to offer multiple networks and compare prices, which made them very useful – in some ways you could compare them to the likes of comparison websites we see today, but solely for phones. In such a small market, with little competition, it’s hard to see how Phones4U went from a healthy company making a profit to closed within a matter of weeks. At least until you look a little deeper into the company.

Phones4U took their training seriously. That’s a necessity however, being as they, and all mobile phone dealers, were regulated by various financial standards bodies, which were in place to protect customers from fraud. From the things I heard, I wouldn’t be surprised if the measures had been put in place due to Phones4U. The company did all their training from their training facility located in the Birmingham Suburb of Erdington at Fort Dunlop, a former tyre factory that had been redeveloped into office and retail premises. Training was good, detailed, and their training centre was very impressive, I have to admit I think I learned a lot. One of the things they tried to put across was that Phones4U doesn’t hire salesmen, they hire assistants. We’re not here to sell you a phone, but steer you toward your ideal phone.

This was obviously bullshit.

All staff were given targets (and often quite high ones), which turns each customer into a value and encourages staff to sell and help less. So few of my colleagues offered after care.

https://www.youtube.com/watch?v=UucLMljiDHg

The training also brought up something else related to not being salespeople. Street Fighting. This was a term I was aware of before joining Phones4U, but learned a lot about during my time with the company. Street Fighting is the act of sending your staff out of the shop to encourage customers to come in and sign a new mobile phone contract. But it was discovering the methods of getting these people into stores that was the most unpleasant. Speaking to someone who had been with the company for years, I was told that staff were encouraged to look for people who looked ‘easy’, people who wouldn’t want to say no, people who didn’t like conflict, people who were, essentially, push-overs. If they were on their phone, ask to look at it. When they handed it over, just turn and walk back into the shop.

Once into the shop, start your sales speech, don’t allow them to say no, only ask questions to which the answer is yes. Repeated questioning where all the answers are yes. Find out when and if they were up for an upgrade and attempt to upgrade them early; get them to pay for the pleasure. The second there’s no way this person can take a contract (eg, bad credit, underage) get rid of them and find someone else, literally drop them. One ‘horror’ story involved a staff member who waited till a mother stepped away from her pushchair and pushed it into the shop, so she would have to come in to retrieve it. The worst thing is, this some people felt this was merely a gutsy sales tactic.

The scariest thing is that Street Fighting wasn’t one or two stores, it was the company approved method of getting sales. The company’s most recent owners were proud to say that Street Fighting wasn’t a way of getting sales and was banned. Or was it? I began work in a Phones4U branch located within a Currys electrical store. The aim of these stores were different to standard retail. There were deals, awful deals, which meant the Phones4U could offer you a cash card to spend in stores if you took out a new deal with them. In theory, it’s a fantastic deal. But all too often I was trying to upsell people who were buying fridges or vacuums to purchasing a phone with their product. Worse than that, we were generally told to pick out people who didn’t look ‘well off’. The kinda person who would take out a deal and get £100+ in cashback and not think about the expensive monthly cost. I had one guy get £350 in cashback by taking the modern equivalent of a Nokia 3210 at £45 per month. He got a huge chunk off the TV he wanted. It wasn’t so pleasant when he came in, unable to afford his phone bill.

So what I ascertained was that Phones4U were rather cutthroat. You had to be willing to get your hands dirty if you wanted to stay in their employ. Their staff turnover was huge, with so many people not being able to hit the sky-high sales targets. Phones4U plays hard ball, but what happens if people don’t want to play? Despite being the UK’s number one independent phone retailer, Phones4U had to keep things to budget. Keeping costs low and selling high was the aim of the game, and Phones4U used their position as the biggest independent phone retailer to ensure that the networks stayed in line, and gave P4U their best deals and a cut of the contract. If a company didn’t want to play ball? P4U would just cut them off: they’d be cutting off their nose to spite their face, the network loses out.

But Phones4U reportedly plays really rough (apparently one of their directors had the nickname The Silent Assassin), and eventually annoyed network Three so much they pulled out and wouldn’t go back. P4U didn’t care, it still had Three’s rivals, O2, EE and Vodafone, who would all benefit if Three didn’t come back to the table. But they didn’t. O2 then pulled out for around 6 months, before returning. That must’ve spooked P4U, so they introduced their own network, Life Mobile, but it wasn’t very good. Their nerves at losing O2 proved correct as two years later they pulled out again. This time they wouldn’t return. O2 only made up for a small percentage of sales so P4U wasn’t overly worried, until a major oversight reared its ugly head.

When Phones4U signed the deal with the Dixons group to allow them to put mini-shops into branches of Currys around the country, they did so with the understanding that P4U would share their retail data with Dixons. This wasn’t seen as an issue, until in May 2014 when Dixons announced they had purchased Phones4U’s rivals, Carphone Warehouse. The company panicked and stupidly announced that despite the fact that Dixons had bought another independent mobile phone retailer, they would continue to work with Phones4U, which were now basically Dixons rivals. Eventually they announced they were disappointed that Dixons and Carphone were now as one, but said it didn’t matter that they were losing the Currys concessions, as it didn’t bring in much money anyway, completely ignoring hundreds of staff that would lose their jobs.

Overnight, Phones4U were no longer the biggest independent phone retailer in the UK. The Dixons juggernaut provided huge financial backing and allowed Carphone Warehouse to do better deals with the networks. Having lost O2, Vodafone announced they would also be pulling out of P4U. The networks were frankly sick of P4U’s aggressive business strategy and attempts to argue down their prices. Now they were not the biggest kids in the playground anymore, the networks didn’t have to play ball. Before long, EE announced they’d be cutting ties with Phones4U, leaving them with no one to do business with. They announced their stores would close immediately. The Phones4U Currys concessions were changed over to Carphone Warehouse and most of the P4U staff from them ended up staying with Currys.

And that was that. If we’ve learned anything it is that in business, no matter how big you think you are, be a little more humble to the people who supply you, because you never know when the end is just around the corner.