We woke Monday morning to the news that high street mobile stalwarts Phones4U was to be placed into administration after EE and Vodafone decided not to renew contracts with the company, placing their future in immediate doubt and PriceWaterhouseCooper (PWC) being called in to oversee their administration.
The company has over 550 stores throughout the UK and employs over 5500 people. They are a major player in the mobile phones market in the UK and if PWC were unable to find a buyer for the business, it would signal an end to that type of business model – the middle man. This is the main reason I am writing about this.
Business Model To Blame
Phones4U blame the closure of their business on Vodafone and EE for not renewing their contracts with them. But the question we have to ask is why. Why did they both choose to stop doing business with Phones4U? Well, most believe that because Vodafone and EE both have a strong high street presence, their need to be a partner with someone like Phones4U was no longer required. They were after all “middle men”, so why would they need them when they have hundreds of stores of their own? They don’t. And that spells bad news for that type of business model. Is there a chance that sort of thing could happen in our industry?
In theory yes. Obviously phones are less costly than windows and doors, it’s not so much of a big ticket item. But our industry does have a lot of middle men, and in recent years the major systems companies have been making attempts to start connecting with the homeowner in order to boost their own brand’s awareness and generate leads that way.
Traditionally it has always been the installations company that generates the leads, which then turns into orders which are sent to fabricators. It is the fabricators that then order in the raw materials to make good on those orders. But thanks to an economic and technological shift in recent years, that structure has now changed.
The Game Is Changing
Is this how our industry is to operate now? Syscos helping the installer when it comes to lead generation? Probably. Lets face it they have the biggest budgets and can plough money into IT and marketing to make it happen. But whilst this help is no doubt appreciated by the installer, fabricators still have their place in the industry.
Syscos aren’t suddenly going to start getting into fabrication. It’s not worth it for them. The whole industry works on the three-stage system which has worked pretty well since forever. That isn’t going to change. Installers will continue to send orders to fabricators and fabricators will continue to send orders to syscos. But fabricators can also be on hand to help installers too. That has always traditionally been the way. It is only recently that syscos have stepped in to reinforce that support.
That doesn’t mean fabriactors can sit back. What the Phones4U demise teaches all “middle men” placed companies is that you cannot stand still now. With main companies now starting to go direct to the end user, the challenge to stay proactive, stay different, keep offering USPs becomes even harder. Being able to stand out in a crows isn’t as easy as it once was.
I’d like to end by saying that I hope PWC finds a buyer for Phones4U. It would be such a same for some many people to lose their jobs just as the economy starts to roar back into life. Personally, I think a nifty little idea would be for Google to have a look at buying the group. It has always been said that Google could do with opening some physical stores. Well, here you have hundreds of stored primed and ready to go. Just an idea!