With the sale of his dealer chain to Go Mobile, JAG boss John George is quitting the industry after 20 years. James Blackman discusses his exit, and Paul Withers polls the industry for its take on the man and his legacy
In the end, John George failed to make the transition from the old dealer market and mindset to the new channel psyche operators have in the past 24 months forced partners to bend to.
JAG, the dealer chain which bore his initials (John Arthur George), grew to be the biggest independent retailer after Carphone Warehouse and Phones 4U, with around 160 stores at its height – and around 140 for a short time with its temporary and failed purchase of Midlands chain Go Mobile.
It was a major resource in establishing Orange, its chief supplier down the years, in the South West also.
But it could not cope with a rapidly-matured landscape, and George finally exited the industry this month with sale of JAG to longtime collaborator Go Mobile on an earn-out arrangement.
George admits as much. “Revenue share hit us tremendously,” he says. “We didn’t cope well when it was introduced; we weren’t really prepared for it. That was one of the biggest knocks we took.”
His reminiscences tell of some lack of sharpness in retail as well perhaps as the UK market reached saturation, attended by the rise of online sales, the roll out of operator stores and a new savvyiness among consumers. “The best time was the early 1990s when we used to have people queuing up outside stores to get in,” he remarks.
“For a long time, store staff knew far more than customers about products and services. That started to change – to the point some customers knew even more than staff.”
The boomtime slowed. Easy ‘new’ business dried up. Networks started to push for profitable and loyal connections from third-parties. This clampdown on the channel churn machine, created by operators in the first place, disrupted the old structure.
Like with much of the dealer sector, a rising distrust of suppliers appears to have taken hold of George by degrees ever since.
“When I started in mobile, the people that you could always trust were the networks. Whatever a network said, the network did. Today, that’s not quite the case.”
The sale of 75 JAG outlets to Go Mobile is, of course, a reversal of a deal struck in late 2008, when the former agreed to take 57 Go Mobile outlets and achieve a national footprint effectively. JAG had a good record of acuisition – with the purchases of 30 shops from WestTalk in 200, 11 from Comms Centre in 2002 and 35 from KJC in 2004.
But the Go Mobile deal went bad, quickly.
George says: “We did that deal at the wrong time, when the market dipped and the recession hit. It seemed like an exciting thing; both chains were making decent money then. We didn’t know a recession was around the corner. It was rotten timing, and a deal too far. If I could change anything I wouldn’t have done that deal.”
The cordiality of the deal’s collapse spoke well of George’s relationship with Humphrey, who has by default taken the unofficial role of ‘dealer champion’ with his Shebang software, fulfilment and distribution service to JAG and others.
By June, JAG and Go Mobile announced they were to resurrect their failed deal to merge their two companies in a new 50/50 joint venture. The new joint venture arrangement saw the two parties provisionally pool a combined retail estate of 109 outlets (both estates reduced since the original deal).
But the JAG estate entered into the new deal looked very different, made up by large franchise outlets as George had sought to hand off risk to franchisees following a forced prepack administration as trading suffered in the recession and new-look market, and Lloyds TSB withdrew its £2.3 million overdraft.
In the end, George was ready to quit, and the JAG transfer was completed with the closure of its Perranporth headquarters and the removal of £90,000 at least of operational costs.
He says: “It made better sense, financially. There’s no point me running the whole thing from Cornwall. Iain’s staff have a lot of experience across a range of networks. Our experience is very much limited to Orange.”
It means the JAG brand will go from the high street, or the secondary towns where George found his niche.
He says: “I’ve had a fantastic time. I’m very happy with my time in the industry. I would never change it. It’s a very changeable, fluid market, and it was a really nice thing to work in.”
National sales manager for independent retail and distribution at Orange, JAG’s principle supplier
“John will be sorely missed. He has been in the industry for many years and at the forefront of retail.
“John has had a very longstanding and successful relationship with Orange. He has seen massive changes within product, including size and specification, and many new innovations such as mobile broadband and data growth.
“He has also seen an industry grow from low numbers into tens of millions. I would like to wish him well with whatever venture he chooses in the future.”
Managing director of retail chain Go Mobile, which eventually purchased the JAG chain, and also of Shebang Distribution, which has handled JAG’s fulfilment and retail software for five years
“John has seen his business is in good hands, and reckons it is better served by a single head office.
“I would like to pay tribute to John for being a legend within independent retail for a long time and an absolute pleasure to work with – even through some difficult times.
“He has championed the sector and he struck on the business model for independent retail to serve local communities in secondary towns, which remains an essential service and the basis of what we continue to do.”
Franchise holder of JAG’s ‘Bridport Orange’ store between October 2009 and April 2010
“John was a good man to work for and a good listener – he certainly wasn’t an autocrat. I think he had a sound vision for the franchise network. It was just unfortunate that he encountered a terrible economic situation.
“The biggest frustration for the staff was that John wasn’t able to secure the iPhone for sale in the stores. We didn’t have something compelling enough to persuade customers to choose us over Carphone Warehouse, Phones 4U or any network store.
“John was the head of the whole thing and so the infrastructure was such that we all waited on his next move. And sometimes it was the wrong move and there weren’t enough senior people to advise him.
“JAG was John George, and when he started running out of ideas, there was no culture for any new thinking or approach. When he was in the cold, the whole company was as well.
“Stepping down is a good move for him. Away from the high street, he built the largest chain of independent phone shops in the UK, and that’s what he’ll be remembered for.”
Former managing director of Intek Communications, a southwest rival of JAG’s, now owned by Go Mobile
“Past treatment and support of smaller independents by the networks has been nothing less than appalling. It is part of the reason why leading figures such as John George are leaving the industry.
“They have made it so difficult for companies like JAG to survive. The networks have largely become faceless organisations, unprepared to share the risk with partners. They want the ‘good’ business created by the smaller independents putting their necks on the line, but are not prepared to properly share in the risk.
“There are few characters left who you can deal with and who understand the business at the coal face. They misread the difficulties faced by independent entrepreneurs in making the business work and the problems of cashflow management whilst trying to keep all the networks happy.
“John George has contributed hugely to the industry over the last 20 years or so and it is indicative of what the business has become that he has had enough and called it a day. I wish him well, and I wish Iain Humphrey, Damian Cole and the rest of the independent champions well for the future.”
Managing director of independent retailer Fonehouse, which runs a similar franchise programme to JAG
“I don’t buy into this deal with Go Mobile – one moment JAG is buying Go Mobile, the next the deal has failed, now it’s been revived again. But John’s exit was hardly a surprise. JAG’s whole franchise programme was an accident waiting to happen.
“It smacked of desperation from the start – a way to escape the troubles it found itself in.
“JAG ran into difficulty and had to free itself of its shop leases and reduce its payroll. It was all too quick, and unplanned. The JAG franchise scheme is very different to the Fonehouse model, which launched long before and was planned carefully.
“John’s model was originally low rent and low salaries in secondary locations; he went where Carphone Warehouse and Phones 4U weren’t prepared to go.
“Iain Humphrey did the same thing in the Midlands with Go Mobile. And it does not quite make sense to me why John got into difficulties because secondary locations like that still work well for our franchise partners.
“He must have been making good money at one stage. Perhaps he got caught by stretching himself to have more stores.”
Managing director of independent retailer and local JAG rival Get Connected
“It’s a shame that what must once have been a good business turned into a badly-managed and unprofitable mixture of franchises and original JAG branches.
“We lost an awful lot of staff when JAG sold them a dream of running their own franchises. The vast majority failed within months. It turned into a nightmare, and left young and impressionable people in debt for rent and stock.
“With Iain Humphrey at the helm, it should be a better business with a more professional approach. John George will not be missed by Get Connected.”
Veteran Orange loyalist and managing director of B2B dealer and franchise brand Sprint Communications
“To be in retail against the likes of Carphone Warehouse and Phones 4U is a tough place to be, but John was clever to move to areas where they wouldn’t go.
“Everybody knows the JAG brand, certainly in the South West and in the industry generally. In that sense, his achievement is considerable. Independent retail is hard. John was one of the few to succeed at it. He has been around a long time, so he deserves credit.
“Running a retail chain is hard in a buoyant market, and it is almost impossible in a recession. But independent retail is an important route to market, and it can be successful if done correctly. Dealers should not lose sight of that.
“Franchising can work. McDonalds and KFC have shown that it can be a way to achieve growth very profitably. But it is not a way to escape underlying difficulties.
“I think that to walk away from the kind of troubles JAG has faced in the past couple of years can’t have been the hardest decision in the world. And I think that with Go Mobile, there would have really been two captains on the flight deck. I’m not sure it would have worked any other way.”
Worked in JAG’s Burnham-on-Sea, Street and Wells stores between June 2007 and June 2009
“I found John to be a good guy. The times I met him, it didn’t matter whether you worked with him at head office or were a brand new sales person, he would always stop to talk to you.
“His problem was his middle management. He seemed to lose track of the sharp end of his business because of the lack of direct command, and the people he put in place there.
“He got caught by some of the industry changes too.
“He was doing very well for a very long time but he couldn’t keep up with it all. The biggest problem JAG had was when revenue share was introduced. For a couple of months, we really struggled to put out any decent deals.
“The other problem was network and connection targets kept changing. And it could harm the brand’s reputation. That was the case with T-Mobile. In the three stores I worked in, T-Mobile just wasn’t reliable enough for coverage and there was huge pressure on us to hit targets.
“It was one of the reasons for me leaving – in the end, I wasn’t hitting the targets because I refused to connect T-Mobile.
“When the networks were putting pressure on John to do that, the reputation of the stores decreased. With Carphone and Phones 4U stores around the corner, you have to have a good reputation to get repeat business.
“But apart from them, he was one of the first to bring independent mobile retail to the high street and secondary towns. He led the way for companies such as Get Connected, Fonehouse, Intek and Go Mobile too. That was all down to him.”