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ARTICLE
Hearing Mike Stead talk about the history and continued success of his company – award-winning DJ store Phase One – is a masterclass in business acumen, marketing savvy and, most fittingly for our current climate, perseverance. Like most businesses in our sector, his Darlington-based store, which sells DJ and disco equipment, has been greatly affected by COVID-19, suffering the knock-on effect of thousands of DJs and entertainers being unable to work.

Mike observes that the entertainment industry was one of the first industries to close and will be one of the last to open up again, admitting that the pro side of his business has “really died” since the pandemic began. Despite this, Phase One has maintained itself through a testing 12 months, seeing a growth in the home or “bedroom DJ” market as bored youngsters turned to a new hobby to get them through lockdown. In fact, this ability to spot incoming marketing trends and change business strategy to exploit them is something Phase One has been consistently good at throughout its 40-year history.

HOW IT STARTED

Starting life as Phase One Records Ltd, the store was opened by Mike’s father back in March 1981. The shop was already a record store, but, being a successful mobile DJ and knowing that DJs would be coming in to buy the records anyway, Mike’s dad decided to expand on this premise by selling DJ equipment (mostly secondhand) upstairs. “A lot of the stuff back then was homemade. People made their own light screens and light boxes,” says Mike. “That’s basically where it really started.”

Mike practically grew up in the shop and his first job for Phase One, in a paid capacity, was sorting through old jukebox records. Mike’s dad had a contract with the main jukebox supplier in the North East, by which he would take all the old vinyls off their hands, paying around a penny per record. These records had the middles cut out, so Mike would put 45 adaptors in them and repackage the records in new white sleeves, ready for Darlington’s covered market, where he and his dad would sell the records at 3 for £1 – not bad considering they cost a penny a piece!

Having grown up surrounded by records, equipment and mobile DJs, you could say DJing was in Mike’s blood. At 16 he was acting as a roadie for local DJs and soon became a mobile DJ in his own right, just like his father before him, before moving into club and bar work. For a number of years, Mike worked as a butcher by day and a DJ by night, starting out playing 45s before eventually moving to CDs, experiencing the new technology and audio format preferences as they changed.

In the mid-80s, Phase One had actually started making its own lighting fixtures: “My dad did get into manufacturing, and this was back in the day when Abstract were making their first Twister… in a garden shed somewhere!” says Mike. “He got involved with another company that was into manufacturing, and he met a couple of people who were good with electronics and they started making their own lights.”

During our interview, Mike finds an old invoice that lists a Phase One Mini Sunflower – something he describes as being pretty standard: “It didn’t do anything; it would’ve been the most unexciting light today. And it got red hot,” he laughs.

The price for one Mini Sunflower? £106.40 +VAT. Other Phase One products developed by Mike’s dad include the MIDI Sunflower – which wasn’t DMX and cost approx £166 +VAT – and the Snappy, a derby-style effect that cost £113 +VAT.

Fast forward to when Mike was running the shop and Phase One was selling products by lighting manufacturers such as ACME. “Just imagine what my dad thought when he saw me selling things like an ACME ImpossibLED for £135, and what that did,” says Mike. “He couldn’t see how we could sell that and not lose money, but I knew we had to. I took over at the right time.”

MIKE TAKES OVER

Taking over the shop came after a period during which Mike managed pubs and bars in collaboration with his wife, who had become pregnant. Mike’s dad, who was ready to retire, offered him the chance to take over, pointing out how familiar he was with the DJ industry and the customers.

For the first year, Mike and his dad worked together, to help ease him into his new responsibilities. But Mike already knew that the shop needed completely rethinking, to be more innovative in its approach to retail.

“My dad never even had a credit card machine and we had a stand-up argument about getting one. To the point that I got out of the car and walked home, the argument was that bad. ‘The machine is going to cost you £15 per month,’ Dad said. I said, ‘Yes, but we need to be able to take money off people in a different way.’”

At the point Mike came into the business, there was no internet presence or website for Phase One. But the store had sold products by mail order, which they advertised through a very early version of DJ Magazine. It’s crazy to think of now, in a world of online shopping and next day delivery, but DJs from across the country would order from Phase One by phone and receive their product by mail.

Mike had loads of ideas he wanted to take forward, but things took a while to get going and his friends were stumped by his commitment to what they deemed to be a sinking ship. “Everyone thought I was insane,” says Mike. “Even my own dad was telling me: this won’t earn you a living, you should get a ‘real’ job. He would get local butchers to come down to the shop and interview me while I was working!

“We weren’t known on a national level, like we are now. I just knew that once that shutter went down on the shop, it would never re-open. So I decided to keep on at it. And that’s when eBay came along.”

LOOKING TO THE FUTURE

By 2004, Mike was really embracing the technical possibilities of the time. The big global investment in digital products during the 1990-2000 “.com bubble” manifested itself in a growing online culture – including e-commerce and social media. The business was already finding success with eBay, but the Phase One website just wasn’t creating customers.

That’s when Mike saw an advert from Business Link, the government-funded business advice and guidance service. They gave Mike a two-hour slot with an “internet expert”, who came to his house (the shop didn’t have internet) and reviewed the Phase One website. Mike recalls: “He said, ‘you’ll never sell anything off that.’ ‘Why? It’s brilliant,’ I replied. He said, ‘Well, nobody is going to have any trust in it. You need a proper e-commerce website, and you’re looking at £5-10,000.’”

Mike really wanted to launch this all-singing all-dancing website, but simply didn’t have the funds. In a stroke of good luck, it happened that Rothmans Cigarettes – whose Darlington factory was closing down pending a move to Russia, resulting in big job losses for the town – decided to leave a legacy fund to help the development of local businesses. After receiving a call from Business Link to tell him about the scheme and some possible funding, Mike applied and was fully funded, allowing him to go ahead with his long-awaited web project. Phase One finally had its flashy e-commerce website, in-store internet, and a new computer.

Rather than just letting the new website sit there and hoping it would sell, Mike proactively sought to push his online sales by optimising for Google search and running PPC (pay-per-click) adverts. So, when the council ran a competition between the businesses who had received funding from the Rothmans legacy fund, Mike was able to show how well his website was performing. Mike won the competition and received extra funding, enabling him to continue developing the website.
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But it wasn’t just e-commerce that Mike stayed ahead of the curve on. He adopted video marketing fairly early on, using the extra council funding to run a separate server that enabled him to host forward-thinking, if crudely filmed, product videos on his website. Soon after, YouTube launched and Phase One was in the perfect position to take advantage, thanks to the catalogue of videos they’d already created.

“People buy from people. Video was the only way to get across people thinking they know me, although they don’t really. It was the closest I could get on an e-commerce level. As our subscribers grew, it just went from strength to strength,” explains Mike. “Sometimes I’ve questioned whether I should have done it but then other times I think it’s been the making of Phase One. I took something free like YouTube and put our little shop on a stage.”

Embracing video early on actually gave Phase One its competitive edge and the company saw huge growth in 2007, something Mike attributes to the amount of video content they were putting out. Customers still respond well to these videos now; Phase One’s YouTube channel has 9,600 subscribers and their most popular video has racked up 418,000 views and counting. Even today, Mike hosts many of these videos himself.

CONTINUING GROWTH

After moving online, ahead of many of its competitors, Phase One was perfectly placed to take advantage of the LED explosion. The business began to see huge growth as DJs and other entertainers rushed to buy new LED lights. Of course, Phase One’s video marketing strategy allowed Mike to showcase this new-fangled lighting tech in all its glory, helping persuade more and more DJs to embrace LED lighting as part of their setups.

“In my tiny little shop we couldn’t move for stock. I was taking stock home, my garage was full, there was stuff under the spare bed… my wife was going doolally,” says Mike. “Once we moved online, ahead of the curve, and the LED phenomena happened, I was there ready. I was selling loads and loads of LED lights. Things snowballed – and the product videos really helped.”

When the banking crisis struck in 2008, Mike was understandably worried, like most business owners. However, just like with the funding for his first website, Mike was presented with an opportunity and decided to take it. Following the crisis, banks were keen to back small businesses and help them through the recession; Mike’s bank got in touch and offered him a mortgage on a new, much larger premises to help Phase One grow its online retail.

“At first I thought we would be rattling around in it, but about a year ago I was like, ‘we need more space’ and I started hiring containers to put stock in,” Mike says. “It’s not the case at the minute, with the current situation, so I’m glad we didn’t go any bigger! COVID-19 has had a huge impact on us.”

INDUSTRY TIES

It’s clear that much of Phase One’s success has been down to Mike’s tenacity and foresight regarding e-commerce and video marketing, two things that are now staples for most successful, modern retail businesses. But he’s also keen to highlight the importance of maintaining strong ties with manufacturers and being involved with the mobile DJ industry at a more grassroots level. “We were quite early getting behind NADJ, because they were up in our area, so I used to go to their meetings,” Mike tells us. “I’ve always been a big fan of the mobile DJ because I started out as one. I was still DJing in a residency until maybe 11 years ago. But it was getting too much; the shop was busy, I had a bigger venue, and I needed to concentrate on that.”

Despite leaving it behind, Mike recognises the part that his DJing career played in allowing Phase One to flourish and better understand its customers: “DJing 3-4 nights a week paid my mortgage, when I first started. I think I have a great understanding of the industry because I’ve been in it, and I’ve worked in it from a very early age, from mobile discos and 45s right through to now. So when it comes to selling a product, I feel I can really help the customers that come in.”

As we interview Mike over Zoom, we can see his mixer in the background and a huge collection of records engulfing an entire wall. He’s reluctant to get mixed up in the sync vs no-sync debate, but does offer some thoughts on what makes a great DJ.

“I don’t like DJing from a laptop. I do like a USB stick or a piece of vinyl,” says Mike. “But I’m not against sync, I’ve got no problem with it, and I don’t think DJing is all about mixing, I’d rather listen to a DJ that plays me great music that isn’t necessarily mixed, rather than a DJ that plays me music I don’t like but is beautifully mixed.”

Mike has maintained his connection with mobile DJs, NADJ and the wider industry, even as Phase One has continued to grow. The shop’s popularity with the readers of Pro Mobile was made evident by the shop’s success at our annual Pro Mobile Awards, picking up Best Retailer in 2018 and 2020.

Prior to the 2020 award announcements, a promise made after a drink or two resulted in Mike – never one to go back on his word – presenting one of his legendary product videos stark naked, save for a mirror ball or two!

“When I said that I’d do it, we weren’t in a situation where we were going into COVID-19. But by the time it came to film it, we were in lockdown, and I really think it put a smile on everybody’s face,” says Mike, with a grin. “We don’t take ourselves too seriously and I think it would be a real shame if we did.”

You can find Phase One online at:
djanddiscostuff.com
and check out their YouTube channel at:
youtube.com/phase1djstore
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The full review can be found in Pro Mobile Issue 106, Pages 58-62.
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