Phones 4 U

When a brand pops its clogs, what should happen to its social media presence?

 

This month’s collapse of mobile retailer Phones 4u shows one thing for sure - brand owners should not simply give up on their profiles.

 

When a company dies, its potential in the afterlife does not. Every Twitter account has a value. In the case of a brand like Phones 4u, parts of which are being snapped up by rivals, this is a new kind of value that administrators should now begin to recognise.

 

Phones 4u’s follower base of nearly 38,000 is attractive. Three-quarters of them are active Twitter users, according to our BirdSong data. That means they are still receptive to messaging.

 

In fact, this audience is worth at least £69,000. That is the cost of successfully gaining new followers similar to Phones 4u’s and Carphone Warehouse’s, at $3 per bid, using Twitter’s Promoted Accounts ad feature.

 

Not only should administrators closely examine the value of brands’ social media presence; they have a duty to inform and, where possible, continue serving customers confused at this worrisome time.

 

Phones 4u’s Twitter following has actually grown since it entered administration on September 14, mimicking the trend seen when other brands have suffered disaster, such as Malaysia Airlines, HMV and JJB Sports. 

 

But an increased audience after corporate death isn’t just mawkish rubbernecking of a business car crash - many Phones 4u customers who previously took their ongoing service for granted have likely started following the brand for customer service news.

 

Phones 4u followed the number-one rule best practice rules in situations like these, by tweeting, with feeling, a signpost to the administrators’ statement on the matter.

 

 

This at least communicated news of the company’s downfall to many of the people who care most about it.

 

However, the administrators could do more. That message on September 15 was the company’s final tweet, its online epitaph. The questions of customers about continuation of their services have gone unreplied-to.

 

This contrasts with Phones 4u’s strategy concerning other channels. The company continues to operate a telephone phone line for customer questions, so why not continue engaging on Twitter?

 

And what about the many Phones 4u customers who may not have even seen the company’s important last tweet in their crowded streams at that moment? One way to enhance its handling of the situation would have been to auto-tweet its epitaph regularly, at different times of day, whilst in administration, maximising the chance that customers in need would receive it.

 

Still, Phones 4u’s strategy has been infinitely better than the many brands who simply pull the plug.

 

Last year, the pop group Girls Aloud had 109,000 Twitter followers. Then the band split up, deleting its Twitter account entirely. Becoming what one follower called a “ghost band” deprived the girls and their label of any future opportunity to market still-available archive recordings, a tactic that could have realised ongoing value for both camps.

 

Simply deleting an account also leaves your brand’s name susceptible to squatting. And doing so without first exporting a list of your followers would deprive your company, or its next of kin, a potentially valuable inheritance.

 

Time to get tough on landlords

Lots of social and community wellbeing, economic growth and employment is generated by the High Street. It is essential that our councils and Government act to halt and reverse the deterioration.

The negative effect of too many landlords is crippling too many High Streets, as was reported by Mary Portas, with several recommendations associated with this.

Many of the small businesses in the FSB are operating on these high streets, struggling to make it look attractive. This, whilst less scrupulous business people, often from more affluent areas, gamble on property prices while draining the area of it’s very life force, lowering the property prices.

There should be a responsibility that goes with owning a property on a High Street; sitting on it whilst it goes to “rack and ruin” to make money in the long-run should no longer be an option. Councils should actively and aggressively pursue business rates for unoccupied commercial premises. Not doing so, costs the community doubly, as the council loses funds, and the negligent landlords are not motivated to fill the properties by being charged business rates. Landlords of High Street properties should have a responsibility to have an action plan which aims at the occupation of the commercial part of the property.

This could and should include communication of who to contact to rent the property, the rental price, the standard of the property, and more active options such as allowing the use of the premises for pop-up shop purposes etc.

Allowing the deterioration of our High Streets has to end. And this is even more true of Blackpool and other tourist towns as recreation visitors expect pretty places.

Phones 4U in administration as Vodafone denies acting 'inappropriately'

Phones 4U shops will not open today as the mobile phone retailer goes into administration, blaming decisions by EE and Vodafone to pull out of Phones 4U stores.

Phones 4U is, along with Carphone Warehouse, the UK's major high street mobile phone retailer, employing 5,596 people in 550 stores. Like Carphone Warehouse, Phones 4U sells a range of phones and contracts on various networks, which means that it needs those networks to continue supplying those phones and deals. But the last remaining major networks, EE and Vodafone, have now pulled out of their agreements with the retailer.

O2 and Three had already pulled out earlier this year. "If mobile network operators decline to supply us, we do not have a business," Phones 4U boss David Kassler told the BBC, after EE cancelled its contract with the chain on Friday.

Stefano Quadrio Curzio, of Phones 4U's owner BC Partners, blamed Vodafone in particular, claiming the network's "behaviour appears to have been designed to inflict the maximum damage to their partner of 15 years, giving Phones 4U no time to develop commercial alternatives."

But a Vodafone spokesperson told CNET today that "we strongly reject any suggestion that we behaved inappropriately at any stage during our negotiations with Phones4U," blaming the decision to pull out on the retailer's failure to come up with a "commercially viable" agreement.

A Phones 4U spokesperson has since fired back, telling The Telegraph, "This is a shoddy way for Vodafone to deflect attention from their actions."

The decision by networks to pull out of third-party retailers is motivated by a desire to cut costs as European legislation and the UK's healthy competitive market squeeze profits. Each network has its own chain of high street stores so doesn't rely on sales from partners.

Founded in 1996 by John Caudwell, Phones 4U is now owned by private equity firm BC Partners, which acquired the chain in 2011 in a £610m (€770m) deal. PwC is expected to be appointed as administrator for the troubled business, and will make a decision on whether stores can re-open.

Phones 4U staff have been told to turn up to work today and will continue to be paid for the moment.Dixons Carphone, the parent company of rival chains Carphone Warehouse, Currys and PC World, hasstated on Twitter that it "will be opening up discussions with the administrators to agree what we can do" about securing the future of Phones 4U staff working on "shop-in-shop" Phones 4U stands in branches of Currys and PC World.

If Phones 4U does join Comet in oblivion, that would leave Dixons Carphone stores the last technology shops standing on the high street.

Samsung, which has Samsung Stores in partnership with Phones 4U, says it is "business as usual" at the Samsung Experience Store in Stratford's Westfield shopping centre, and is looking for a new retail partner.

Phones 4U shops closing down across UK

Retailer Phones 4U has gone into administration putting 5,596 jobs at more than 700 outlets at risk.

Accountancy firm PwC has been appointed to see if any of the 560 stores and 160 concessions can be re-opened or sold.

The retailer, owned by private equity firm BC Partners, blamed the decision to shut its shops on mobile network EE's decision not to renew its contract

This followed a similar move from Vodafone earlier in September.

"If mobile network operators decline to supply us, we do not have a business," said Phones 4U boss David Kassler.

The company said established mobile contracts taken out through it would not be affected, although phones ordered and not despatched - for example anyone ordering the new iPhone 6 over the weekend - would be. A customer service line will be open from Monday at 09:00.

In a statement, PwC said: "Our initial focus will be to quickly engage with parties who may be interested in acquiring all or part of the business, and to better understand the financial position and options for the company. The stores will remain closed while we have these conversations.

"We will also be talking to network operators and suppliers, and trying to access funds to pay for the costs of the business, including wages.

"These conversations will determine whether we can re-open stores and trade, and also if and when we can pay the arrears of wages to employees. Our hope is that we will be able to pay all the outstanding wages arrears."

Tesco's UK sales fall as consumers feel the pain

World No.3 retailer Tesco Plc (TSCO.L) was hit by a drop in underlying sales in Britain for the fourth quarter in a row as cash-strapped shoppers crimped spending on non-essentials and price cuts ate into revenue in its core home market.

Chief Executive Philip Clarke said on Thursday UK consumers faced severe financial pain: "The UK economy is fragile, unemployment's at a 15-year peak, under-employment's rocketing, so we're facing into tough times," he said.

British retailers are nervous about consumer spending running into the key Christmas trading period following a string of profit warnings from companies such as French Connection (FCCN.L) and Game (GMG.L) and weak industry data for November.

On Wednesday outdoor goods retailer Blacks Leisure (BSLA.L) put itself up for sale and on Thursday shoe shop group Barratts collapsed into administration.

European store groups are struggling as shoppers' disposable incomes are squeezed by rising prices, muted wages growth and government austerity measures, and as they worry the euro zone debt crisis will plunge the region back into recession.

On Tuesday Metro (MEOG.DE), the world's No. 4 retailer, issued a profit warning, saying festive trading had started slowly.

"We're all prepared for it (Christmas) and there's a lot to play for," Tesco's Clarke told reporters.

Tesco, which takes about one in every 10 pounds spent in British shops, said sales at British stores open more than a year, excluding fuel and VAT sales tax, were down 0.9 percent in the 13 weeks to November 26, its financial third quarter.

That compares with analysts forecasts in a range of minus 1.0 percent to plus 0.5 percent following a drop of 0.9 percent in the second quarter.

It also compares with increases reported by rivals Asda (WMT.N), J Sainsbury (SBRY.L) and Wm Morrison (MRW.L), albeit for different trading periods.

Tesco said its outlook for the 2011/12 year was unchanged.

The firm, which trails France's Carrefour (CARR.PA) and U.S. leader Wal-Mart by annual sales, makes around two thirds of its sales revenue and three quarters of its profit in Britain.

The group has suffered in the economic downturn more than its main British supermarket rivals, in part because it sells more discretionary non-food goods where shoppers have been cutting back most.

"SELF-IMPOSED DEFLATION"

Tesco hit back in September, cutting prices in a 500-million-pound investment. It then reduced prices again in November to lure in Christmas shoppers -- a medium term strategy it has coined "self imposed deflation."

Clarke said food and grocery sales volumes were up by nearly 1 percentage point quarter on quarter.

"We created deflation in our food and grocery categories but we've got volume improvement ... The Big Price Drop's having the effect we wanted it to," he said. "We never expected to see it absolutely immediately in the top line."

Finance director Laurie McIlwee said the price cuts contributed over 1 percent of deflation in the quarter.

"We've created quite a chain reaction in the industry," McIlwee said, noting that official UK prices data for October had shown UK supermarkets had helped to pull back food inflation.

Tesco shares, which have underperformed the STOXX Europe 600 retail index .SXRP by about 4 percent this year, initially fell but had recovered to be flat at 396.9p at 1257 GMT, underperforming a FTSE 100 index up 0.25 percent. Analysts said consumers' response to the price cuts had been muted.

"We were hoping to see more of an improvement in momentum following the introduction of the new pricing strategy," said Espirito Santo analyst Caroline Gulliver.

Market research group Kantar Worldpanel said on Tuesday Tesco had lost market share to rivals.

Tesco noted continued weak demand in the more discretionary areas of general merchandise, clothing and electricals.

McIlwee said third quarter like-for-like sales in this category were still negative but "had improved quite a bit" and were better than the 5 percent fall in the second quarter.

Third-quarter group sales including fuel rose 7.2 percent, broadly in line with analysts' expectations.

The international business excluding fuel and on a like-for-like basis was up 1.1 percent.

Underlying sales growth in Asia slowed to 0.8 percent, held back by disruption in Thailand caused by flooding and the warmest November for 75 years in northern Asia.

Like-for-like sales were up 0.9 percent in continental Europe and up 11.9 percent in the United States where the firm's Fresh & Easy business is gaining momentum.

Clarke said he was disappointed India had suspended plans to open its $450 billion a year supermarket sector to foreign firms. "We think it's a lost opportunity," he said.

Blacks Leisure to be sold as investors reject cash call

Blacks Leisure, the struggling outdoor retailing group, has been forced to put itself on the market after shareholders refused to inject more cash into the business.

The company announced yesterday that it wished to "invite offers to support further investment in the group, which is most likely to involve a sale of the company or sale of one or more of the group's brands". This came after talks with shareholders about raising investment foundered.

The shares plummeted more than 50 per cent to 1.85p as the company revealed that, with debt at £36m, "there can be no assurance that any sale would attribute value to the ordinary shares of the group".

The decision to move to what company insiders called "plan B", is likely to pave the way for a pre-pack administration. The controversial insolvency procedure allows a company to collapse and then be bought quickly by a new owner, after its debts have been wiped out.

The accounting group KPMG, which was involved in an insolvency procedure that saved Blacks two years ago, has been called in to run the sale.

The company, which also owns the Millets chain, has been desperately tapping up its shareholders to raise additional cash. Analysts put the figure at about £20m, although Blacks has declined to name its exact target. The group said last month it was experiencing the worst retail environment it had ever seen.

As well as the need to raise cash, Blacks has been in negotiations with Lloyds Banking Group to renegotiate more than £40m worth of debts that fall due at the end of February.

The discussions have proved fruitless, forcing the company to put itself up for sale yesterday. One insider said: "There was good response from the shareholders, but there wasn't the support for the capital raising. The appetite wasn't there."

Sources close to the group would not be drawn on whether a pre-pack administration was imminent. One source said: "All focus is on a sale. These are strong brands and it is still a market leader."

Last year the company turned down a 62p-a-share bid from Sports Direct, owned by the Newcastle United chairman Mike Ashley. Sports Direct has a 21 per cent holding in the group.

The sources close to Blacks said the previous management team could not recommend it to shareholders as "so many conditions had been attached".

Sports Direct declined to comment on the Blacks announcement, or say whether it would return to the negotiating table with another bid for all or part of the company.

It emerged yesterday morning that Sports Direct was prepared to help Blacks with a joint venture that would share costs on warehouses, the supply chain and technology.

Barratts jobs at risk as shoe chain falls into administration

Shoe shop Barratts has become the latest victim of cut-throat competition on the high street after it was forced to call in the administrators on Thursday, threatening almost 4,000 jobs as Christmas looms.

Barratts Priceless Group, which is controlled by Michael Ziff, has 191 shops – including one on Oxford Street opened only last year — and 371 concessions. Deloitte has been appointed administrator.

The news came as speculation grew that a huge round of store closures was under discussion at Peacocks, the struggling clothes retailer chaired by Allan Leighton, formerly an Asda director and chairman of Royal Mail.

Sources said up to 200 shops could be axed in a bid to turn around the performance of the business, which has £240m of debt. Shareholders include the US investment bank Goldman Sachs and lenders include Royal Bank of Scotland.

The company was unwilling to comment on any closures. It said: "We continue to progress our restructuring discussions and plans, with no decisions taken at this point."

Barratts's move is the second time in as many years that it has been forced to seek protection from creditors and comes 24 hours after the outdoor clothing retailer, Blacks Leisure, said it was looking for an emergency buyer.

Daniel Butters, joint administrator and partner in restructuring services at Deloitte, said: "Barratts and Priceless Shoes have faced a downturn in trading as a result of the difficult economic conditions. This has been exacerbated by the unseasonably mild weather in recent weeks which resulted in fewer sales across new winter lines." Industry experts said Barratts was under pressure from low-cost stores such as Primark rather than direct rivals such as Clarks. But critics argued the latest crisis showed the company had failed to take tougher action earlier.

Deloitte said it would continue to keep Barratts trading while seeking a buyer for all or part of the business, in a bid to save 3,840 jobs.

It hopes to repeat the rescue of 2009, when the retailer was put into administration but 160 of 280 stores were bought back by Ziff, a veteran shoe retailer and chairman of the Stylo group.

Privately owned Barratts Priceless Group made a pre-tax profit of £6.1m on a turnover of £218m in the 18-month period to 31 July last year, according to accounts filed at Companies House.

In October, Barratts announced Richard Segal would become chairman. He said at the time: "Like many other retailers, the company is currently operating in a challenging economic environment and I look forward to working with the executive team to accelerate its adaptation to recent market changes."

In a newspaper interview less than 12 months ago, Ziff said he was still scarred by the "traumatic" experience of cutting 2,500 jobs in 2009. He explained: "This is something I would never ever want anybody to go through again."

Lenders to Peacocks, which was originally formed by Warrington-based businessman Albert Peacock in 1884, brought in the accountants KPMG last month to draw up a plan to improve performance. it reported to Companies House it had made profits of £66.5m in the year to March 2011, but has run into trouble since.

The 200 rumoured closures, out of 611 UK stores and 117 overseas, were being discussed as part of a broad restructuring plan aimed at safeguarding the company's future, Sky News reported, quoting people "close to" Peacocks.

The talks over the future of a business, which also owns almost 400 Bonmarché outlets in Britain, involve a large syndicate of banks led by Barclays and partly state-owned Royal Bank of Scotland.

Another part-nationalised bank, Lloyds Banking Group, sold most of its interest in Peacocks' debt to a firm called Strategic Value Partners several months ago. Goldman Sachs, which is both a lender to and investor in the clothes company, was expected to become Peacocks's biggest shareholder after the debt restructuring.

Deteriorating trading conditions have hit all kinds of retailers, including clothes shops and electrical chains, with consumers cutting their discretionary spending as the cost of energy, food and other essentials have risen.

Blacks Leisure has closed 101 stores in the recent past but this year issued two profit warnings and on Wednesday put itself up for sale.

On the same day electrical retailer, Comet, announced first-half losses of £23m, underlining why its parent group Kesa had recently agreed to hive off the 248 store chain to a business turnaround specialist for a nominal £2.

Last month the American retailer Best Buy said it was pulling out of Britain, while Focus DIY collapsed into administration earlier this year after defaulting on loan payments.

In June furniture store Habitat went into administration before some of its stores and the brand were bought out by Home Retail Group.

And struggling sports retailer JJB Sports narrowly avoided administration three months earlier after agreeing a new deal with landlords and agreeing to close up to 89 of its stores, in addition to the 140 stores it shut in 2009.