In little over 12 months, JAG has gone from the most powerful independent dealership in the land to a business apparently struggling for survival.
Towards the end of 2007, JAG’s retail footprint stretched to around 140 stores across the Southwest, the Midlands and Northern Ireland.
Its ambition to bridge the gap between parochial dealer chain and national retail brand was much closer being realised. And then it went wrong.
JAG managing director John George, outwise of work a veteran of the British Touring Car Championship, has been in some scrapes on the track, but never quite like this at the helmof his retail business.
In November 2007, JAG confirmed in principle the purchase of 57 stores in the Midlands from its closest dealer rival Go Mobile. It was a bold statement of intent from George, and swelled his retail empire to 140 outlets. All Go Mobile stores were to be re-branded with JAG signage, and JAG took on around 140 staff with the purchase.
Eight new store openings in Cornwall were in the pipeline, too, and JAG’s headquarters were to be moved from Bodmin to a larger site in Perranporth.
The store transfer saw Go Mobile managing director Iain Humphrey concentrate on the Shebang distribution business, the Sellfone EPOS system and new retail ventures.
The deal was structured around the performance of the Go Mobile stores, which would continue to be tied into the Shebang distribution set-up, with payments made over a period of up to five years. At the time, JAG managing director John George said: “The better the stores do, the quicker the money will get paid.”
Humphrey said: “The Go Mobile chain is better off in the hands of John George, who has the flair and entrepreneurial drive to take it to a higher level. JAG’s profits and retail success in the past year outstrip mine, so the Go Mobile chain will go on to even greater things.”
JAG, suddenly, looked like it might just fill the competitive void left by The Link, which collapsed in mid-2006 and left the high street open to Carphone Warehouse and Phones 4U among independent retailers. But the deal collapsed. JAG was forced into significant cost cutting and ventured in and out of administration after the final chunk of its overdraft was withdrawn by Lloyds bank.
George was forced to invest his own money to keep the company trading.
“The deal seemed really straightforward and it made financial sense,” reflects George. “But two months after announcing it I started to see the market was changing rapidly and the recession was starting to have more of an impact. I never could have predicted the mass change that would take place.”
George accepts part of the blame for JAG’s troubles, claiming the furore around the Go Mobile deal saw him lose sight of his core business. “The focus got withdrawn from our business; we didn’t pay as much attention to network developments as we should have done.”
JAG was hit hard by changes to Orange’s clawback policy, for instance. “Orange reduced the amount it refunded back to the channel to 50 per cent, which hurt. We didn’t quite grasp what it meant longterm,” he says.
At the same time, George figured reasonably he had developed significant scale in his retail business to make JAG harder to ignore for suppliers. “The networks couldn’t refuse to trade with us,” he explains.
But staffing issues were threatening to get out of control. A recruitment drive was well underway, with new area and store managers appointed to manage the increased workload.
A mystery shop to 12 randomly selected stores in May last year, however, identified shocking results. George was “absolutely appalled” at his staffers’ habits and techniques.
Training manager Paul Wilkie said at the time that reshaping the business since the Go Mobile acquisition played a part in these poor results. George called for an immediate review.Six weeks later, a second mystery shop saw much improved results.
“We had lost our focus on the really important stuff – customer service,” he said. “Staff training is so important – you have to follow it through at every level but it does wash through very quickly. It’s important for the company as a whole to support what the staff are being told.”
Full article in Mobile News issue 437 (April 20, 2009).
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