Phones 4u’s administration indicates the importance for retailers to value their relationships with their suppliers in order to stay competitive.

The sight of previously high-flying retailers laid low by the financial turmoil and structural challenges of the past seven years has been an all-too-familiar aspect of the industry’s recent past.

From Comet to Woolworths, most shared common symptoms as they lost touch with customers and sales and profits declined to unsustainable levels.

This week, however, a healthy and profitable company with revenues above £1bn plunged into administration.

There were no signs either that the retailer was not serving shoppers admirably. Because of its ‘comparison’ service that enabled customers to ensure they were getting the best deal in the mobile phone market, one could argue consumers will be worse off as a result of the retailer’s demise.

A lack of product, not profit, is to blame for Phones 4U’s collapse. Vodafone and EE both called time on their relationship with the retailer following similar decisions by O2 and Three earlier in the year.

The loss of any high street name is to be lamented.

But that of a profitable one that employs nearly 6,000 staff is particularly hard to stomach.

“The need to nurture relationships with suppliers has been grossly under-estimated”

Chris Brook-Carter, Editor-in-chief

Inevitably a war of words has erupted as various parties attempt to deflect blame onto one another. Vodafone has accused the retailer’s private equity owner BC Partners of milking the business, leaving it no room for commercial flexibility.

Phones 4u claims it is the victim of aggressive plans by the mobile operators to expand their retail presence.

Its founder John Caudwell has already speculated a similar fate could threaten rival Dixons Carphone.

However, Carphone not only has a broader and more defendable position after its merger, it has a reputation for nurturing its relationships with mobile operators and building partnerships.

Phones 4u’s management, by comparison, has at best woefully misread the position of its suppliers and at worst treated them with disdain. And when a business relies on only four key suppliers that folly is multiplied many times.

It’s a cliché of retailing that relationships matter. In the case of Comet or Woolworths – and even Tesco’s recent troubles – it was the relationship with the customer that was overlooked. In Phones 4u’s case, the need to nurture relationships with suppliers has been grossly underestimated. Perhaps its demise has more in common with that of its fallen peers than would first appear.

Chris Brook-Carter, Editor-in-chief