Q&A: Fonehouse MD Clive Bayley

Paul Withers
November 3, 2011

Paul Withers spoke to Fonehouse’s managing director at its recent partner conference to discuss the retailer’s recent growth and its strategy moving forward

How is business at Fonehouse and general retail?
Sales were down around 25 per cent in July and August in the retail market as a whole. In September we recovered that deficit. The franchise partners have not tipped that much. We’ve just opened up five in the new shop design. Another seven are opening up in that format before Christmas. We’re still in a recession. People are a bit more nervous than they were a year ago.

How many shops do you expect to have open before the end of the year?
It will be over 50. We’re going for quality. We only want good partners. We might well lose a couple. If we do we’ll make sure we add a few more. We’re really tightening up. If we have any partners that don’t understand what we’re doing, I can’t see them being with us for more than three or four months. There’s no point having a franchise model if some of the franchisees are not doing the numbers.

You launched your franchise programme in May 2008. Are you in a better position now than you would be without it?
Absolutely. Our compliances are fantastic. Our processes are really tight. The marketing is targeting the right areas and the offers we’re able to provide to both our partners and consumers are good. We’ve put a lot of effort into trainers on the road and we have a rigorous training programme for new partners. We’ve spent the last six months ensuring that everything is up to scratch. We can now grow to 100 stores but we’re not going to chase it. We want the right people.

Has the franchise programme helped strengthen relationships with both networks and handset manufacturers?
It has with handset manufacturers. Networks are always a bit nervous about anyone rolling-out a number of stores. But we’re on the verge of adding Orange to add to the T-Mobile, Vodafone and Three connections we currently make. We’re nearing a full house.

How is your store refit programme developing?
We’ve refitted our flagship store at Bluewater. All new stores are opening up with the new look. The feedback is extremely positive. It’s a big change but it’s working really well. The sales processes have changed and we’re training that into the partners. It’s taking a lot of time but by Christmas we’ll have that buttoned down.

Why the move to this new store concept?
Before we were just selling a network (T-Mobile). Now we’re selling a lot more and giving people a reason to walk into our stores. We have to differentiate ourselves from Carphone Warehouse, Phones 4U and the network stores. We’re aiming for the people who don’t like Carphone Warehouse and Phones 4U or don’t like being restricted to one network. It’s very much the ‘support your local high street’ ethic which crosses different demographics of people who don’t know what they want or don’t want to be hassled. We’re creating a relaxed atmosphere without the hard sale.

Have your partners welcomed this new look?
People are scared of change but they are embracing it. A store refit is a pretty big decision for them. Anyone new joining has to agree to the new format. It’s quite a leap from what we had before. We’re improving accessory sales and have a new prepay section going in. The new store experience is very intuitive to the customer. We’re developing the store concept around our customers.

You first began making B2B connections on October 1, 2010. How has that progressed?
We’re taking on some B2B partners. Seven partners out of 53 are making business connections. We’re trying to get the correct processes in place before we go big-time on it. We’re training our partners to sell within their local community to clients who want up to 10 handsets. Next year we may have 20 dealers who sell B2B but who don’t have a retail store.

A year ago you said you had lost focus on prepay and sales weren’t as good as they should have been. Has that changed?
We see prepay as an important footfall driver. We’re going to offer a wider prepay and accessories range and we are making the stores more product-focused. Our new shop fit will allow us to have a huge prepay range.

You don’t stock the Apple iPhone. When will this happen?
We’ll get it eventually in our new stores. They kind of look like Apple stores. We’re trying to get approval from Apple. The iPhone is the biggest seller but not necessarily the biggest profit maker due to the cost. It would be nice to have it because customers want it.

What is your position on tablet computers?
They’re not selling big in environments like ours. We’re not pushing them. We sell them but they’re an additional product. Next year they will be part of our new store concept. I’d like to see a tablet, accessories and prepay section – sectioning everything a bit more. We’re trying to put everything under manufacturer grouping.

Have you seen evidence that your partner and consumer incentives work?
We have seen footfall increase but they need fine tuning. Working with Sony, Universal and Warner Bros film studios is fantastic. Our branding is now built around the home, so we’re trying to bring theatre and home entertainment more into store. We can’t afford a movie star in all of our stores, so we have the next best thing, a Hollywood film promotion.

What has been the message to your partners from this conference?
Don’t panic. Keep calm. We’ve put a lot of work into improving processes and support systems. The focus is on the customer and they must come first. We have all these new networks and products to enable them to do that. Eventually the recession will end. We’re in the right business because everyone needs a mobile phone. It’s now seen as a must-have gadget in everyday life. The most important thing is trying to ensure customers return because the service they get is the best. We have to be the best in service. We have to aspire to do that.

Full report on the Fonehouse Partner Conference in Mobile News issue 500 (October 24, 2011).

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