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Sound Control + Turnkey go into administration...

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Re: Sound Control + Turnkey go into administration...

Postby Tomadvent » Thu May 15, 2008 12:52 am

Watty wrote:
Tomadvent wrote:Are you seriously suggesting that with a company the size of SC the fact there were only 4 complaints should be regarded as good - plainly it never occur to you that it simply meant that you were utterly out of touch with what was happening at shop level. Plainly the loss of control was greater than I had ever imagined!

Four complaints escalated to head office level is actually very good going for a company which would've turned over in the region of £25 million pounds in that time. If only 4 complaints came through to us then that suggests that the managers were capable of sorting out issues at store level.

Plenty of informed posters on this thread have explained what SC's actual problems were but these explanations seem lost on you with your bitter anti-SC agenda.

Hmmm - once again Watty you lower the tone to personal assumptions in what otherwise is an instructive and reflective thread to the variety of reasons which led to SC being in administration.

Personally I was aware of some of the other problems first hand - and had questions about whether the rapid growth was contributing - with hindsight I cannot help but wonder whether the focus on price was at the cost of customer care. Would SC have been better sticking to sustainable prices and focusing on excellence in customer care as other retailers do.

I think other readers will draw their conclusions about whether 4 complaints in 6 months on a £25 million turnover is good and an indication that all was working wonderfully for SC or indicative of deeper problems with the HQ/company culture. Posts from SC staff at the professional MI forums would also raise questions.

I sincerely hope that the optimism expressed in the Scottish press about the future of the remaining stores is well-founded - we could all do with them thriving.
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Re: Sound Control + Turnkey go into administration...

Postby comradec » Thu May 15, 2008 1:10 am

Tomadvent wrote:I think other readers will draw their conclusions about whether 4 complaints in 6 months on a £25 million turnover is good and an indication that all was working wonderfully for SC or indicative of deeper problems with the HQ/company culture. Posts from SC staff at the professional MI forums would also raise questions.


The number of complaints received at Sound Control HQ is an entirely meaningless statistic and proves nothing at all.

For one thing, it depends on how the company defined 'complaint', which can have a formal status suggesting a high level of seriousness or be a term applied liberally to every little grumble that comes in.

It also depends on the process via which complaints are conveyed to HQ. Are we counting the customers who went directly to the chief exec with their problems or every concern relayed from branch managers?

A low level of complaints, however, can also indicate completely different things. The optimist will claim it proves that customers are very happy and issues are resolved amicably at branch level. The cynic will suggest that customers don't complain because they have no faith in the company's ability to deal with their concerns so they simply take their business elsewhere.

I don't know which of the above are true and which are not, but quoting the figure of four complaints proves absolutely nothing either way.
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Re: Sound Control + Turnkey go into administration...

Postby Tomadvent » Thu May 15, 2008 1:14 am

Booster wrote:SC operated on an overdraft from the bank. They did this for years. They over extended themselves with the Turnkey purchase and were in talks to sell it and other things off. They had laid off Directors and cut back costs. The bank pulled in the loan before they could finalise anything and that is why they went into administration. That is the only reason. There was no measured decline in support or customer service. Yes local managers couldn't always action what they thought was best for the company. This happens in other chains too. But this is not why the chain went under. Turnkey probably has the worst reputation in terms of customer service, (check the forums) and time and time again people come back to buy there. Bad service doesn't always mean you lose business, as long as you offer good terms and low prices. Even if there was a drop off in business due to bad customer service (or product knowledge et al), it is certainly in no measurable way responsible for the collapse.

We all know that factually it was the bank pulling the plug but your consequential scenario raises some questions

- why did the bank pull in the loan on a company of which is publically had such high hopes and a Director on the board - why did SC find it hard to sell of parts of the company - were sales growing still - were margins growing as projected - did they "lay off" Directors or did they jump themselves - could it be that SC placed itself alongside the internet firms with low expectations of customer support rather than against its retail shop competitors with a focus on support.Have others read how customers attitudes to staff changed over the years - and price became the be-all and end-all of the remaining customers - Have others noticed that declining service looses customers who are looking for good service - have others noticed that the specialist retail shops that have survived long term tend to focus on good service before the cheapest prices - have others noticed that SC never actually advertised the cheapest prices

Can't help thinking there is a little more to it than "the bank pulled in the loan" - can't help thinking that if these other factors were all OK they might actually have been discussing a further overdraft - which apparently the same Bank did with Dolphin in November 2007.

However if it was just an arbitrary decision by the bank one Monday morning I would be wary of placing an order with Dolphin?
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Re: Sound Control + Turnkey go into administration...

Postby comradec » Thu May 15, 2008 1:23 am

Tomadvent wrote:Can't help thinking there is a little more to it than "the bank pulled in the loan" - can't help thinking that if these other factors were all OK they might actually have been discussing a further overdraft - which apparently the same Bank did with Dolphin in November 2007.

A loan is governed by a contract between the lender and the borrower under which the latter will repay the former specific amounts at agreed times.

Unless it becomes apparent that lies were told in order to obtain the loan in the first place, a bank is unlikely to 'pull' such a loan if the customer is meeting their repayments to the agreed schedule. What would be the point of that?
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Re: Sound Control + Turnkey go into administration...

Postby RodCjnt » Thu May 15, 2008 2:41 am

Reason for administration: mis-management & poor decision-making by the SC hierarchy.

Having worked there for over 5 years, I know how Turnkey worked both before and after it was purchased by Sound Control.

Prior to SC buying TK, TK's bank account was in the black, despite high central London rents. I don't think SC understood what it was buying really - Music Tech is not the most profitable sector to be in, and for a company expanding using leverage it's not a great idea to jump in to a £12 million (?) purchase commitment if you don't know what you're getting into.

SC thought they could increase the fairly lean (but profitable) profit margins by making as many non fee-earners (ie support staff) as possible redundant. They talked like the salespeople were important to them, but behaved in another way - the basic attitude to staff retention at TK had never been good, but when SC bought TK it became noticeably worse (eg. a particular, extremely valuable company sales director was viewed as expendable/replaceable).

At the time I seem to recall we had a good handful of salespeople who produced 2-3 times what the average salesperson did - this number of course dwindled as SC's mis-management of TK became clear (no smart guy likes working for a moron); say 5 guys producing over £300k per month (1/5th - 1/4 of an average month's turnover).

I personally never had a problem with the pay, but then I sold a lot - I was probably one of those guys some customers thought arrogant or rude (I made it an art-form to "move through" time-wasters). For all those TK bashers throughout the ages, unless you work in a retail store in Central London you have no idea about the constant stream of morons who come through the door wanting to "makes some beats innit" or wanting to record violins with a Samson CO1 and a Behringer Mic100 and have it sound great... Bit off topic, but anyhow.

It was noticeable from early on that the 2 people SC put in charge of TK (lookout for Gibson UK tanking soon - alreet pal!) had no idea about business fundamentals. My favourite SC decision was to move the main storage warehouse during December '06 (WTF???) - busiest month of the year... If you ever wanted to know how much that kind of crash stupidity costs you - it's about £650,000 in obvious and immediately lost sales (no idea how much repeat/future business TK lost due to it).

Basically SC tried to run TK like just another Sound Control branch - which kind of defeated the point. Much maligned though TK was, prior to SC's buyout it worked rather well (even if there were a significant amount of clueless monkeys on the staff, and some customers got annoyed sometimes). TK did what it did (shifted boxes cheap and added cables to make up the margin); Mediatools was quite a respected pro audio entity; Soho Soundhouse knocked out guitars at pretty high margin and Carillon made damn good computers AND managed to cultivate and keep a very good reputation (and if DV don't at least buy Carillon, they're not very clever). SC tried to lump TK/MT/Carillon into a Sound Control shaped hole and found that it didn't fit right and that the more they tried to squeeze the damned thing into the SC shaped hole, the more the turnover and profits declined.

I ended up jumping ship a year ago when it was painfully obvious that the management were running TK into the ground and that it was an obvious liability to SC - amusingly, despite my £800,000 yearly turnover they did not make much of an attempt to keep me (it was more the other way around, I could probably have won a constructive dismissal case if I could've been bother to contest). Shortly after I left, one of my big-producing bretheren was framed for nicking a laptop and fired (and prosecuted - he was acquitted, surprisingly, because he didn't do it).

And don't get me started on who got put in charge of sales after they lost the important sales director mentioned earleir...

The only thing that surprised me about SC/TK going bust was that it took so long to happen - glad I jumped ship when I did.

1 little note to end on: the customer is also to blame (to a certain extent) for the company going bust. The customer wants the cheapest price possible in the asking price of the product, and typically also then want a discount...(haggling, price-beating between shops etc.) Plus these customers are surprised when the service is not so good - in general terms if a retailer's margin is 17% (gross) do you think most of the staff are eating steak nightly? No, and obviously if the pay is poor (for those who are not good/very good salespeople - but who perhaps have good product knowledge) people won't stay in the job long - basically the customer creates a vicious circle for themselves, they don't want to pay much, the retailer can't afford to pay staff good money so the staff turnsover and you're basically left with a bunch of monkeys.

Sorry if that's all a bit opinionated, and given that it's 2.30am, probably not particularly coherent or well-argued...

I think it'll be interesting to see whether it's Thomann or Guitar Center (sic) who fill the void, but I really don't think we'll miss Sound Control much (feel sorry for the staff who lost their....etc etc). Perhaps a better run company will exploit the mess. Perhaps Argos will buy them and take them to their logical conclusion.

Take it hard :headbang:
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Re: Sound Control + Turnkey go into administration...

Postby Setter » Thu May 15, 2008 9:21 am

Tomadvent wrote:[Can't help thinking there is a little more to it than "the bank pulled in the loan" - can't help thinking that if these other factors were all OK they might actually have been discussing a further overdraft - which apparently the same Bank did with Dolphin in November 2007.

However if it was just an arbitrary decision by the bank one Monday morning I would be wary of placing an order with Dolphin?

A lot has changed in the banking world since Nov 07 and banks which were keen to continue funding are now looking for any excuse to recover outstanding loans. I'm not suggesting they pulled the plug illegally, but in the past late payments which would have been 'overlooked' to keep the interest coming in are now being seen as an excuse to reduce exposure to less attractive debts.

The comment about Dolphin (and any other mail order supplier) is well made. The bank organised (or managed) the receivership in order to make sure they got as much money out the wreckage as possible (and damn the customers who will be bottom of the heap). Part of that was keeping their decision to pull the plug a complete secret until the last moment.

They could be planning the same for others and it is as wel to take the sensible precaution of always paying by credit card for any order you place.

J

PS I'm not a great fan of banks!
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Re: Sound Control + Turnkey go into administration...

Postby Steve Hill » Thu May 15, 2008 10:41 am

In a past life I had a conversation with a director of a major bank. He was moaning that they were "expected" to try to rescue a 4-star hotel in trouble in a South Coast resort which was on the verge of bankruptcy.

He said the problem was that they banked five out of six of the 4-star hotels in that town and the economic reality was the market could stand maybe four such hotels. By keeping the lame duck alive for "PR reasons" he was helping to ensure that his four other clients (a) faced unfair competition, and (b) faced an increased risk of failure themselves. The kindest thing to do was to let the weakest go bust and let the market find its own level.

He was right.
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Re: Sound Control + Turnkey go into administration...

Postby Booster » Thu May 15, 2008 11:24 am

I think that if there was no 'sub-prime' mortgage crisis, then Sound Control would still be trading, chipping away at their debt. That's what the banks want, as another has said. They would have had time to offload Turnkey etc, which wasn't 'hard' - These things just take time.
Rod's post sums up beautifully what happened at Turnkey and the way it was all managed. Huge logistical blunders that contributed to the crisis. Of course all the other factors come into play, small and big. But even with these mistakes, if we were in a better economic climate, S/C could have saved their bacon and continued to shaft their staff for years to come. :roll:
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Re: Sound Control + Turnkey go into administration...

Postby Tomadvent » Thu May 15, 2008 1:48 pm

Thanks Rodcnjt for an excellent, and perceptive post - it is good to have staff understanding which matches up with the frustrations of serious professional customer and his clients.

The comments are particularly telling about Carillon which were excellent and yet lost ground to competitors who copied their technical model but which provide good personal service as well.

As to the thoughts about SC shops survival then presumably buyers will be taking into account the potential arrival of BestBuy from the States in their new link with Carphonewarehouse. If they do come they States side shops are huge, and they have from what I have heard a passable reputation for service. They will place one retail unit in the top ten cities - and will not duplicate as SC did.
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Re: Sound Control + Turnkey go into administration...

Postby Booster » Thu May 15, 2008 3:07 pm

Actually Carillon were known for their personal service. Most of the comments on the forums here and elsewhere usually read something like: 'A bit expensive, but their support is great'
Turnkey itself could be hit and miss with service though.
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Re: Sound Control + Turnkey go into administration...

Postby Tomadvent » Thu May 15, 2008 4:33 pm

Yes Carillon were excellent - but again problems emerged over the past 12-18 months when they became more mass market - and I think they lost ground by placing product in general SC stores which did have the depth of knowledge needed to support the product. Leeds SC quite openly referred people to the London setup.

They also failed to tap into the particular and specialist requirements of the education market - which other firms particularly Rains seem really geared up for. Guess its the one bit of the former SC group I really see a future for as a distinctive company.
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Re: Sound Control + Turnkey go into administration...

Postby Booster » Thu May 15, 2008 4:46 pm

Yes it's true that the SC staff as a whole weren't trained enough on the high-tech side of things. But Carillon never went mass-market. All after sales support regardless of where the unit was bought, was maintained directly via Carillon. They also had many educational clients who place regular orders with them. In any case, SC didn't realise what they had and failed to capitalise on the Carillon equation.
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Re: Sound Control + Turnkey go into administration...

Postby AudioHero » Fri May 16, 2008 2:51 pm

Turnkey took £700 of my hard earned cash for a soundcard, two days before the administration took over april 30th. I wont be getting any of this back.

I went into the shop and was given the number of their administrators deloitte, a voicemail stating I am not entitled to anything as an unsecured creditor.
Deloitte will contact me in due course, but that just means sod off you arent getting anything. I doubt they can even manage to get my address/tel no right

Turnkey could have at least had the decency to pick up the phone and let me know, would have saved me a trip to central london. I was on hold on the phone for 30 mins while they were doing nothing in the shop.

They could have also let me know as soon as the administration went through rather than finding out 2 weeks after while searching the web and wondering why my product is late for delivery.


Lessons learned:

Always, always use a credit card!!!!! - Dont use debit or cash

Never, ever pay in full for a deposit on an un-delivered item!!!!

Feeling pretty sick right now....

But feeling pretty good about the fact that I just ordered the same soundcard by a new company, just too bad I had to pay basically double to get it here!

Consumers shouldnt get ripped off in this situation. Someone has legally taken my money and is also still selling my soundcard!!!!!
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Re: Sound Control + Turnkey go into administration...

Postby Steve Hill » Fri May 16, 2008 3:06 pm

I said several pages ago that there are possible serious consequences for the directors if they take deposits like this. Someone said above (I don't know how accurately) that the bank had a director on the board....

If there are a significant number of people in your position it really is worth leaning on both the administrators and the government Insolvency Service (who must ultimately take a decision to prosecute) to press for directors to be disqualified from acting as company directors ever again (or at least for up to 15 years, the maximum penalty).

Despite your understandable anger, don't be too hard on Deloitte, they are actually decent people shovelling up other b****rs sh1t. It's not their fault there was, probably, nothing in the pot for unsecured creditors by the time they got there.
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Re: Sound Control + Turnkey go into administration...

Postby jayzed » Fri May 16, 2008 3:12 pm

Wow, huge downer on losing the £700. I don't think I'd be quite so magnanimous about it - well done, if the money really is gone then there's probably no point losing sleep/hair etc over it.

I did want to add that I've always found Turnkey a great place to shop. I have some scruples, so if I'd spoken to a TK staff member about my choice and found it cheaper elsewhere I'd always spend the little, and it was always a little, bit more.

I did notice that after the 'merger' that TK started to feel less like a nice place to hang around, occasionally spending the odd £500 or so and that the staff did not seem to be in to it as much.

I've been through several company 'mergers' in my career and I've yet to see it work well. It really takes careful thought and lots of planning but many business people don't seem to understand the importance of corporate culture as it's not something that can be written down as a figure.

It's a crying shame that TK has gone down although after reading the posts it seems that it was on the way out for a while. I know that it was a superstore of sorts (nothing compared to the appalling SC) but as I've shopped there for over 10 years I was never treated shabbily.

I did not shop their exculsively, also using other places around Denmark St plus the occasional online buy so it's not the end of the world but it may well be, for me, the end of an era.
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