Tuesday, 16 September 2014

Phones4U administration - more internet driven destruction?

Who would have thought those nice price comparison websites with their silly adverts and easy to use functionality could destroy so much of the British way of life?

When I say Way of Life, I really mean it. After over 200 years ago now Napoleon tried to insult the British by saying they were a nation of shopkeepers... it has been a long time that the UK has had a huge part of the economy in retail - understandable for such a traditionally strong trading nation.

However, the Internet is the biggest economic and social invention of recent ages, likely that it will become the biggest driver of change in the history of the world, equalling the industrial revolution.

And in many respects, change has come quickly. Only 15 years ago we had the dotcom bubble and plenty of people laughing at the failure of the Internet start-ups. Of course, over time, every single prediction about the net has come true; we all have broadband, most people use it every single day, it accounts for a large and growing amount of expenditure, it has gone mobile. The predictions seem to be about 5 years wrong every time in terms of practicality, but they come true in the end.

Now with Phones4U, a retail option of offering multiple service providers is gone. Instead the remaining networks will either sell themselves or over the Internet. Hundreds of shops and employees are going. Carphone Warehouse merged with Dixons, so their own shops are going the same way.

Phone shops have been ubiquitous on UK High streets for 20 years and their small spaces are not ideal for other venues so they will prove hard units to fill.

My thoughts are what is next for the Internet monster:

1. Banks
2. Estate Agents
3. Job Agencies
4. Supermarkets
5. White Goods stores

I am unsure as to what remains in the very long-term apart from charity shops, coffee shops, bars and restaurants with a smattering of clothes shops.

22 comments:

Anonymous said...

The end of estate agents and recruitment agencies can't come soon enough!
Has anyone ever had a positive experience with either and not felt that you've been ripped off (taking into account effort & skill required vs cost) ?

Anonymous said...

I think it is more of a reflection on the dying days of VC rather than the effect of the internet.

Piss poor analysis from the so-called financial brains behind the acquisition.

Perhaps they will find another mug to sell it onto.

CityUnslicker said...

The VC did very well out of it anon. As did John Caudwell; the bond holders, not so much.

Bill Quango MP said...

The retail consensus, since the crash, has been only business that is immediate or can be carried out online as successfully as offline,or requires the users presence can survive. And many, not even then.

So - nail bars, Hairdressers, general beauty and well being, tattoo parlour ..etc. They require a user presence.
Coffee, cake, cafe, restaurant all types of niche foods, fresh foods, cooked foods,fast foods Greggs food ..

So does health - so doctors, optician, dentist massage pet shops, vet, etc . {though they prefer off high street in the main..But dentists/doctors on the high street, once they sort the rates out, will be back.}

Then secondary presence,advice areas. - Estate agents, recruitment, repair, jewellery, black goods /white goods, wedding, sports,
Business where consumers have a knowledge gap and require some assistance. But Even these are shaky. As the phone collapse and holiday shops wobbling shows.

impulse - florist,newsagent, drink,

Giant sellers. - Argos, poundland, primark and so on ..still getting along fine.

And then anything where a unique seller can have a small shop that ticks along on a small local high street, but can have an online sales too. - Books. specialty, antique, jewellery, design, furniture and so on.

In reality, this isn't much different to what has always existed. But the low costs of online vs high street in recent years have moved many individuals to set up online, and never bother with high street.

And other shops are taking on roles. The convenience shop is taking the business that was in a dedicated newsagent. It will pinch the bill payment, top up and posting business from the local post office. The fresh fruit from the greengrocer. The cash withdrawls from the bank. Alcohol from the pub..

For the consumer, even though the newsagent/stationers/sweetshop, Post office, pub, bank, greegrocer, fishmonger, card and gift shop, toyshop, videogame shop have all closed the basic services remain for easy use.

Although with a vastly reduced range of choice.

But there is always online..

BE said...

What could be more apt for the nation of shopkeepers than for many to be running their shops from home?

Demetrius said...

I hate shopping but have been obliged to. Our High Street etc. has been hard hit. What was scary was going into the main WH Smith and M&S shops to find minimum staffing levels along with internet driven supply.

andrew said...

I may have had a tl;dr moment, but there is the shop as destination in and of itself.
- Apple Stores.
- JLewis when it gave out free coffee
- Social experience shopping

and otherwise
- Stuff you want to touch before buying
- Stuff you want right now
- Stuff you cant get online (dentists)

Otherwise the economics of t'internet will dominate.

Not quite o/t, but a branch/franchise(?) of NearDesk opened just behind me - £10 per day for a desk, coffee and WiFi so retail is under attack for the next 5 years or so, thereafter, office space once you start to become genuinely paperless.

MyPropertyName said...

@BQ -

"But dentists/doctors on the high street, once they sort the rates out, will be back"

No, no, no, I'm not having that!
Rates are nothing more than an analogue of private sector rents because rates are derived from rents.
If theres a problem with rates its because rents are too high. And as we all know if rents are too high its because property valuations are too high.

If you want the economy to boom, start taxing land (and property), increase taxes on 'capital' (artworks, old cars etc...but let the owner assess valuations) and reduce taxes on labour and enterprise.
Income taxes should be 0% for those below say 25k (include welfare payments in this), shouldnt be more than 30% for those under say 75k (or 3x national average) and punitive above that.

Endless, multi-generational rent extraction has got to stop if the country and economy are to survive, let alone prosper.

Bill Quango MP said...

MyPropertyName: When I use rates its intended as rent/rates. I don't hold with the land tax.
But your general point about property prices is a sound one.

I looked at a shop last week in a tiny town. local population 5,500, catchment, 10,000 max, but probably no more than 8,000 as transport links are dire.

Now in Surrey that size would be a hamlet. In London a corner shop on a normal street would have a catchment of about 5,000-10,000. In Wiltshire its average size town.

Shop had rents of £18,000 pa and rates of around £7,000.
Unbelievably high for a nowheresville, nothing of 1000sqft.

{saving grace on this one is the flat above comes with..So sub letting the flat brings back in £800-£1,000 pm, making the actual rent low.. We'll probably take it as its dirt cheap to pick up}

Have posted many many times on rents/rates on here.
Ironically it was the phone shops, who followed the coffee shops, who added a 100% to rates just on their own.
A whole new market was made in telecoms. In both instances location was the primary determination of success. So companies would pay a virtual unlimited amount for a key location. And that caused the rent chase.


The Stigler said...

1. Banks
2. Estate Agents
3. Job Agencies
4. Supermarkets
5. White Goods stores

Banks have really already been done. We've switched from walking into branches to using the internet.

Estate agents are tricky because people have to pick one selling agent. Online would be cheaper, but what if they can't get you buyers?

Job agencies are already happening a bit. I know some tech sites that have job ads. But a lot of recruitment agencies add value - tracking down people from contact lists.

Supermarkets? We're already doing home delivery, but there's still that thing of wanting goods immediately.

White Goods stores? There's already been some thinning out, like Comet going to the wall. Personally, I like to see what a TV looks like before I buy it.

Phones4U's problem is that they weren't doing anything that Vodafone weren't doing already. Vodafone already have phone shops, pretty much no-one is after advice about which network as we all have phones already. Remove Phones4U and people still buy a new phone but without the Phones4U option, they opt for Vodafone themselves. Plus, the whole business model of P4U is going to fall apart in the next few years anyway as phones have become so cheap that buying them on contract seems a bit daft. Phone packs up, you walk into Tesco and buy a new one.

andrew said...

Phone packs up, you walk into Tesco and buy a new one.

+1

the problem i have is that i cime from a generation that darned socks.

Steven_L said...

Phones4U were pussycats. When I worked on outbound sales for one of the big 4 networks, I could slam a £4 a month photobundle on every P4U salesperson I called.

You could never get CPW folk with that one. You could never get their customers either, because they'd beaten you to it every time.

P4U just relied on silly cashback scams, and when OFGEM clamped down on them they were always going to be toast.

MyPropertyName2 said...

@BQ - I'd be interested to hear your views on a property/land tax at some point.

Would you indulge me with a post stating your position at some point?

We can but learn.....

(This numeric CAPTCHA is a great improvement btw)

James Higham said...

Supermarkets.

Thud said...

I was an early adopter of all things online but if I have to shop then places like Cheshire oaks make it an almost bearable experience. Easy access, free parking, food and a good selection of shops.....seems to be a success.

Anonymous said...

As a consumer I thought P4U were a great store - their USP being that all their phones were unlocked (and most phones are more expensive to unlock than they used to be - the networks try and keep you tied to them).

So you bought a PAYG phone with a £10 prepay card for provider X, then immediately put a Giffgaff sim in. They've just upped their prices for non-bundle calls but are still very competitive, 3p a minute to call a US landline or mobile !

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