back to article Top Gear Tigers and Bingo Boilers: Farewell then, Phones4U

"Their marketing seemed to be aimed at the more erm ... chav infested end of the market", wrote one Reg reader on the demise of Phones4U, which went into administration on Sunday. But the drinking classes needs phones too, and why shouldn't they have them? Phones4U catered to this need very astutely, and with more care than …

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  1. Anonymous Coward
    Anonymous Coward

    I do wonder why they went into administration with high quality training and company direction like this...

    1. returnmyjedi

      Sadly based on their profitability (£100m profit on £1bn sales) this brands of training was clearly serving them well, assuming it continued beyond the mid 2000s. If it wasn't for the networks wanting to cream off as much margin as possible the bingo boilers and top gear tigers would still have somewhere to buy their gear (although the advent of the iPhone kinda blurred these class segmentations).

      1. Stretch

        yeah, blurred coz arseholes are arseholes regardless of market research.

    2. Anonymous Coward
      Anonymous Coward

      "I do wonder why they went into administration with high quality training and company direction like this..."

      Why? Ratners were doing a treat until Gerald made his fatal faux pas, and Phones 4U's problem was simply that the MNOs decided they would cut out the middlemen.

      The relationship between buyer and seller has been fraught since commerce first began, and the fake bonhommie of salesmen is equally old. And what's wrong with that? People on these forums routinely moan about sales drones, or sales droids, and similarly insulting terms, and you think that the sellers should hold YOU in high regard?

      I regard car salesmen as lazy, greasy, foul-smelling mobile dandruff dispensers. I doubt they hold me in any higher regard. But so long as we're tolerably polite, and I get a car at the price I want, does it matter what they call me behind my back, or what insulting headline they use for me in their segmentation model?

      1. Jim 59

        I regard car salesmen as lazy, greasy, foul-smelling mobile dandruff dispensers.

        Really ? I have found them to be friendly, efficient, usually well dressed and presented.

        When 'tards complain of "sales droids" they are really complaining about the company saving money by employing people as young as possible, paying them as little as possible and offering no training.

        1. Anonymous Coward
          Anonymous Coward

          "Really ? I have found them to be friendly, efficient, usually well dressed and presented."

          We obviously move in different markets. Presumably you're spending more than I am, and you're happy to see your money spent on plusher showrooms and salesmen with social skills and hygiene. In my world I also have to put up with the pantomime of "not sure I can do it for X, I'll have to go and speak to my boss", tasteless coffee and the like.

    3. Anonymous Coward
      Anonymous Coward

      a company that arrogant was destined to fail.

      I hope the rest of the business world takes note of the exes working there and makes sure they don't go anywhere near other business.

      1. Danny 14 Silver badge

        "a company that arrogant was destined to fail."

        Not really, they only failed because their supplier cut them off at the knees so they couldn't sell any more. They were doing a GREAT job at selling which is probably why the suppliers think they can do better on their own.

    4. Michael Strorm

      Killed by operators, yes, but was private equity to blame too?

      Well, as others have commented, that quite plainly *wasn't* the reason they went bankrupt.

      It's quite clear that the company was in serious trouble as soon as the operators decided to stop supplying it with phones, and obvious that this was a deliberate (and successful) attempt to kill a no-longer-wanted middleman and reduce competition in the market. Yet, while this was what obviously triggered their collapse, it wasn't the whole story.

      It's notable that Phones 4U was bought about eight years ago by BC Partners, a private equity company. Private equity firms are- as many readers may know- notorious for asset stripping, squeezing companies for all they're worth and in particular, for leaching money out of the company by creating financial obligations to companies they just happen to control.

      This piling on of debt of course eventually leads to financial trouble or bankruptcy, but what does that matter when they get to keep the money? OpCapita- the private equity owners of Comet- for example, came out of that deal with a profit despite the company going bankrupt just a year after they bought it:-

      http://www.telegraph.co.uk/finance/comment/9649664/Comet-another-OpCapita-kiss-of-death.html

      (OpCapita also made a profit on their purchase of MFI despite it having gone bankrupt under their ownership).

      Similarly, Phones 4U, despite apparently selling phones quite well until the operetors pulled the plug, had been loaded with debt by its private equity owner. From two Financial Times articles:-

      http://www.ft.com/cms/s/0/f53a3ea6-3cd2-11e4-871d-00144feabdc0.html#axzz3Dh0JNsOX

      "The collapse came a year after BC Partners, Phones 4U’s owner, took out a £200m dividend by adding more debt to the company."

      http://www.ft.com/cms/s/0/dff9383c-3cb7-11e4-9733-00144feabdc0.html#axzz3Dh4q1OGr

      "Phones4U may also have been hampered in its negotiations with operators [..] by its leverage. [..] This may have limited its ability to hand back margin to operators compared with rival Dixons Carphone."

      Does this explain why the company went so suddenly into bankruptcy as soon as the carriers pulled the plug- that the PE owners had leveraged the company as far as its profits would allow, and as soon as those profits quite clearly wouldn't be sustained they were unable to handle their obligations and legally obliged to declare bankruptcy?

      1. jonathanb Silver badge

        Re: Killed by operators, yes, but was private equity to blame too?

        Any company would go bankrupt if they didn't have a product to sell. Phones 4U did still have a load of money in the bank, but without a product to sell, the directors were legally obliged to act in the best interests of the creditors and not waste money on overheads with no sales to cover them.

        1. Michael Strorm

          Re: Killed by operators, yes, but was private equity to blame too?

          Yes, it's clear that if there was no prospect of that business model ever being workable again (due to the refusal of the operators to supply them with phones), then the business would eventually go bankrupt- or at least be a pointless drain on that pile of money- regardless of how much was in the bank.

          But- correct me if I'm wrong- if they'd had enough to pay off their debts, then wouldn't they have done that, closed the dead-end business down and returned the money to the shareholders? I'm assuming that- even if it was in the owners' benefit (and, as I said, PE firms are generally dodgy and manipulative like that) they wouldn't be allowed to simply declare bankruptcy unless they met certain legal criteria regarding that company's clear inability to meet obligations.

          1. Anonymous Coward
            Anonymous Coward

            Re: Killed by operators, yes, but was private equity to blame too?

            "But- correct me if I'm wrong- if they'd had enough to pay off their debts, then wouldn't they have done that, closed the dead-end business down and returned the money to the shareholders?"

            Why? BC partners probably knew the big middlemen in the phone market were all living on borrowed time. But by issuing a load of bonds they moved the risk onto people so stupid they should be thrown in prison for life for criminal stupidity, and the cash from the bond issue will have been passed back to BC and their mates. Meanwhile financial regulators worry about trivia, and look the other way when people try and report fraudulent corporate finance activity.

            Private equity could in theory do a good job of realising value from businesses that the secondary equity markets can't support. In practice they and the big banks are in cahoots as rapacious, unregulated thieves, and we're currently back in 2006, with the PE houses doing monster re-leveraging deals to foist debt onto businesses that can't support that in the long term, the criminals and fools at the banks are lapping up this toxic debt, and (unbelievably) even tiered sub-prime debt is making an appearance, bring back the CDOs that wrought havoc in 2009.

            Maybe it will end well this time? We could ask the employees of Phones4U? Or those of Maplin when that goes down trailing heavy smoke.

            1. Michael Strorm

              Re: Killed by operators, yes, but was private equity to blame too?

              @Ledswinger; Very good post, but to be clear, my original point *was* that they didn't have enough cash on hand to cover their intentionally-accumulated debt burden.

              I was replying to Jonathanb's comment in order to point out that if- as *he* suggested- they'd had sufficient cash then they wouldn't have been allowed to go bankrupt until that cash ran out(?) They could have shut down the company, but that'd be something different.

              The fact that they did actually go bankrupt almost straight away suggests that this wasn't the case.

  2. PCS

    I don't fit into any of those demographics.

    Am I doomed?

    1. wolfetone Silver badge

      No, it just means you're a Pay As You Go customer.

      1. Danny 14 Silver badge

        and there aren't many phones for you with (native) Linux on them anyway.

    2. Fungus Bob Silver badge

      Re: Am I doomed?

      No, you are Divergent and must be eliminated.

  3. Arachnoid

    low wage/no wage market

    So they essentially went for the young,inexperienced, low wage/no wage end of the market........who could fail with that sort of customer base?

    1. hammarbtyp Silver badge

      Re: low wage/no wage market

      .who could fail with that sort of customer base?

      You could argue they didn't fail, but were too successful and therefore came into competition with the network operators who wanted a bigger slice of that very same market

    2. Joe 35

      Re: low wage/no wage market

      Their failure has nothing to do with their customer base, they were successful, but if you only sell three things, A, B, C, and the monopoly suppliers of A and B stop supplying you, you are screwed.

  4. Anonymous Custard Silver badge
    Joke

    Look it up?

    So that's several entries for next year's OED then I presume?

  5. DrXym Silver badge

    Slides don't surprise me

    Walking into Phones4U always gave me a sleazy feeling, knowing that I was being stalked by a sales rep. Not to say other phone shops are hugely better.

    1. billynomates

      Re: Slides don't surprise me

      Errr. Why would you go into a phone shop if you wanted to avoid a sales rep? Surely it's a natural thing for a salesman to aproach a customer and ask what they want. i've always found a quick 'no thanks just looking' a perfectly satisfactory response..

      Anyway they p4u gave me an amazing deal on the boys firstsmartphone. A tenner a month for a Lumia. In and out in ten minutes a duration which the O2 girl had barely managed to access her computer and start trying to flog me an iPhone.

      1. DrXym Silver badge

        Re: Slides don't surprise me

        "Errr. Why would you go into a phone shop if you wanted to avoid a sales rep? Surely it's a natural thing for a salesman to aproach a customer and ask what they want. i've always found a quick 'no thanks just looking' a perfectly satisfactory response.."

        This may come as a shocker but some people like to be able to browse througha shop without being pounced on by a salesrep the second they step in the door. If I have a question to ask or I'm interested in buying something I am capable of asking for assistance.

        Perhaps you prefer the American model where you get "help" whether you asked for it or not -- where the person bothers you purely because they're on a commission. I don't. I find it annoying and pushy.

        1. Anonymous Coward 101

          Re: Slides don't surprise me

          Looking at it from the shops point of view, letting people browse aimlessly is not profit maximising. On the other hand, pouncing on people like high street religious maniacs or chuggers isn't conducive to maximum profit either.

      2. Nigel 11

        Re: Slides don't surprise me

        Why would you go into a phone shop if you wanted to avoid a sales rep?

        To look at and handle some phones?

        This might be part of their demise. Back when phones had buttons (and features rather than apps) touch and feel (and even sales-guidance) was important. Now they are all touch-slabs running Android(*), you don't need high-street outlets. Especially don't need high-street outlets not working for you (the phone network).

        I knew what Android was like from friends who'd got a smartphone before I did. Choosing a phone was mostly down to internet reviews and simple parameters like size, weight, and (reviewer-compared) battery life. Then I bought through Amazon at lowest pricce, and it turned up the next day (with a user manual in Estonian, but what hey, nothing wrong with the phone).

        (*) Yes I do know about iPhones and WinPhones. I just don't want one.

      3. Anonymous Coward
        Anonymous Coward

        Re: Slides don't surprise me

        @billynomates

        Soccer dad.

        1. billynomates

          Re: Slides don't surprise me

          Not really. Soccer dad is only right about having school age children. Can't stand football.

          Clearly I misunderstood the definition of 'stalked'. Oh well.

          1. Anonymous Coward
            Anonymous Coward

            Re: Slides don't surprise me

            I've always found, with all sales reps (not just phones) that they'll only ask if you want help, if you do not want it. The moment you walk into a store and go "I need help doing something" you will never find a salesperson to give you a hand. They'll either have an odd lazy moment and not approach you, while hididng somewhere, be busy with other customers, or quite possibly fall into some alternate dimension.

            This is especially true of tech stores however. Went to currys once looking at something, I forget what. Ambling around the laptop area out of boredom (and to laugh at the prices) I was approached by not one, not two, but three different sales reps asking if I needed help with anything. Got bored of laptops and went to whatever it was I was actually looking for. I had a question about it, and in that moment the entire shop floor cleared out. There was one person at the till with a large number of customers waiting to pay, one guy at their 'tech desk' again with several customers waiting. That was it. Every sales person had vanished into thin air.

            Gave up, went on google to get my answer. Moment I did the salespeople all rematerialized.

            1. Martin an gof Silver badge
              Meh

              Re: Slides don't surprise me

              I've always found, with all sales reps (not just phones) that they'll only ask if you want help, if you do not want it. The moment you walk into a store and go "I need help doing something" you will never find a salesperson to give you a hand.

              Exactly the same here. I think it's the fact that if you appear to be wandering aimlessly ("just browsing") they imagine that they can "guide" you in what to buy, and perhaps persuade you to buy something better - for their sales figures - than you might actually need.

              If, on the other hand, you look purposeful on entering the shop, go straight to the shelf you need, begin comparing prices online and have specific questions about one or two particular devices they know that they have no chance, because you have already decided - pretty much - what you want and can't be persuaded otherwise. In the case of technology shops, there's also the likelihood that the sales reps know less about the product than you do, and they may realise that they can't fob you off with semi-accurate answers, or even downright lies.

              It's not just technology shops, we had the exact same experience a few years ago looking for a new car. Wanted to look at a Polo in a VW dealer, dealer reluctantly came over to show us how to open the boot (wasn't obvious) but wandered away immediately s/he (can't remember) realised that we had a particular model in mind and weren't open to being persuaded further up the model range. We never had a chance to ask questions about servicing, miles per gallon, finance options and suchlike. Other dealers weren't quite so bad, but still not what we were hoping for in 2011 when sales of anything were sluggish at best.

              Best experience? Richer Sounds. There, they actually like it if you go in knowing pretty much what you want and have already checked online if it's in stock. There is some mileage in them selling you something more expensive than you really need, but their main aim is to get as many sales through the till in as short a time as possible and I've always found them (Cardiff stores) very helpful.

              M.

        2. Anonymous Coward
          Anonymous Coward

          Re: Slides don't surprise me

          "Soccer dad."

          Why are they called "soccer" dads in this case anyway? Did the guide writers think they were American or something? Or is this just a lazy adaptation of the American term "soccer mom", despite that term reflecting something quite different (an American social referring to mothers with school-age kids and the American status of football.... sorry, "soccer").

      4. jonathanb Silver badge

        Re: Slides don't surprise me

        I like to look at the phones on display, compare prices, make my decision on what I want to buy, then approach the sales staff to buy it.

  6. Alister Silver badge

    Well they seem to have summed up the UK population of the period quite succinctly...

    Quite interesting, really, and would be more interesting to see the same thing from this decade, and compare.

  7. Cosmo

    Miss Breezers

    "...They have attitude & aspire to be the next Footballer's Wife. Unrealistic expectations."

    Harsh!

    But also kinda true, seeing some of the tramp-stamped, perma-tanned "beauties" around these parts.

  8. stu 4

    class

    great reading that - and accurate.

    I was just left wondering why the hell anyone goes into a SHOP to buy something like a phone anyway these days. I suppose it is just these segments that do surely ?

    The last time I bought something electronic from a shop I think was about 1998.

    1. trenchfoot

      Re: class

      not really.. I bought a phone for the lad from a p4u shop a few days ago. Researched models online, called the nearest store to where I work to see if they had the one I wanted and it was charging on my desk 20 minutes later. Same price as Amazon, 120 fewer hours waiting for it.

    2. jonathanb Silver badge

      Re: class

      I generally find that Carphone Warehouse is cheaper than buying online, and I don't have to wait for delivery.

  9. James 51 Silver badge

    No wonder I am the customer from hell when I walk into phone shops. Don't fall into those pre-defined roles.

    1. Fihart

      Don't fall into those pre-defined roles.

      You do, but you just don't know it.

      Seriously though, these primitive (but needlessly complex) ways of expressing target audience are the domain of marketing graduate product managers whose powerpoint-think is the bane of life for ad agencies.

      Granted, the visual mnemonic fingers for phones 4 U memorably summarises both the name and the chav target, but by and large creative pros in agencies ignore all "research" and follow their instincts.

      1. Anonymous Coward
        Anonymous Coward

        Re: Don't fall into those pre-defined roles.@ Fihart

        "but by and large creative pros in agencies ignore all "research" and follow their instincts"

        "Create pros"! Bwahahahahahahaha! You mean the weirdly dressed kn0b ends who come up with a new corporate slogan or logo, and then expect to be paid several million quid for ten minutes work that doesn't really have any impact on the company's performance?

        I used to work for a high end professional services firm, and they spent a seven figure sum having some "creative" t**t change their logo and corporate colour scheme. Meanwhile, the actual winning of work was done by the fee earning partners and juniors, with some assistance from the business development team.

        1. That Awful Puppy

          Re: Don't fall into those pre-defined roles.@ Fihart

          Having worked with a fair few creatives - no, they weren't paid the several million quid. The owners/managers of the ad firm got the vast majority of those, whereas the creatives were likely paid in mouldy peanuts.

          1. Anonymous Coward
            Anonymous Coward

            Re: Don't fall into those pre-defined roles.@ Fihart

            I just love the rationals behind the logos.

            "By reducing this section of colour here, and expanding this section here it forms a wave which illicits both feeling of calm, and a lust for adventures. By changing from this shade of blue to this one, we're illiciting a dynamic shift of focus which will grab the customers attention and scream "Buy me"

            Or in other words, they took the existing logo, tweaked the boundries between sections and adjusted the colour using curves or something. The professional equivalent of submitting a wikipedia article that you've combed through with a theasaurus, only with less effort involved.

            1. TheOtherHobbes

              Re: Don't fall into those pre-defined roles.@ Fihart

              Most 'design' work actually consists of relentlessly flattering manudjmunt and making the talentless plonkers feel important.

              That's what companies really pay for when they hire a design shop - hours of board-level day care, with activities.

              1. Anonymous Coward
                Anonymous Coward

                Re: Don't fall into those pre-defined roles.@ Fihart

                I'm somewhat convinced that these people go on a simple process of the three options

                There is the correct option, the simple flattering design very similar to the existing logo etc, and two wacky designs that are too screwed up to choose. They then give management these 'three options' convinced that the other designs are so bad, nobody in their right minds would pick them.

                I'm sure they attempted this same thing with the london2012 olympic logo. Sadly management made the wrong choice and went for lisa simpson giving London a BJ.

  10. SiAR

    Really?

    What an utter load of rubbish. Also explains why I've never had a phone from there. I dont seem to fit into any of their profiles.

  11. SiAR

    Really??

    What an utter load of rubbish. Also explains why i've never had a phone from them - i dont fit into any of their profiles.

  12. davefb

    and?

    If the other companies don't have almost exactly the same materials, then I'll eat my proverbial.

  13. graeme leggett

    on the other hand "I aint dead yet might" be the case

    "Bondholders offer Phones 4U write-down to make firm 'viable'"

    http://www.bbc.co.uk/news/business-29250079

  14. MJI Silver badge

    I fit none

    I don't like football

  15. Cliff

    Demographic targeting

    Makes sense all round to sell the right phone and contract to the right person, and based on sweeping generalisations that are actually more specific than look, you get to shortcut the guessing game somewhat.

    I'm slightly sorry they've gone, sad for those who lost jobs principally, but am relieved that the crappy as campaign with the smug American twat will never be repeated. Amazing they got any business at all with that campaign.

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