The collapse of the MFI flatpack empire

On Friday 12 December the administrators announced all MFI stores had ceased trading and most customers with outstanding orders should now apply for a refund.

Background to the collapse
MFI first started trading in 1964, and by pioneering the use of flat-pack furniture, quickly became one of the biggest names on the high street. Later, it was one of the first chains to move to big out-of-town stores.

Victim of the credit crunch
However, along the way it has kept appearing on Watchdog. In fact, back in 1980, when it was one of the first companies we ever featured, presenter Hugh Scully was abruptly ejected from one of its stores. Now, along with Woolworths, MFI is being called one of the first big high-street victims of the credit crunch.

Yet crisis is nothing new to MFI. Over recent months it has lurched from one crisis to another and again and again it has been the same problem - actually delivering the goods customers have paid for.

Botched deliveries
Over the years, Watchdog has received a steady stream of complaints relating to deliveries. We last reported on MFI's problems in March 2008, 18 months after the company had changed hands for just one pound. At that time it promised a fresh start, with advertising that exclaimed "We've changed, have you?" Sadly, it seemed that it hasn't changed all that much and Watchdog continued to receive complaints, mostly involving botched deliveries.

Complaints to the end
Following our report in March, MFI was confident it could get its problems under control and that improvements had already been made. Yet just six months later, in September, MFI was only saved from bankruptcy by a last-minute management buyout. We were told this move would secure the future of MFI, but it didn't. Right to the end the complaints kept coming, some of them all too familiar.

When Natalie Poulter's MFI kitchen arrived in October, there was no sign of the dishwasher and a fault with the base unit meant the sink couldn't be installed. Ever since, Natalie (now six-months pregnant) has had no running water downstairs. Natalie told us: "I have to do the washing up in our bath every night and that's not very easy when you're bending over the bath with a bump in front of you. I just think they've really let down their customers."

One customer still waiting told us she'd hoped to have all her bedroom furniture by Christmas. That's Christmas 2007. The latest delivery date she'd been given for the missing parts was January 2009, 14 months after placing the order.

In a desperate attempt to delay the inevitable, last week MFI was offering the public discounts of up to 70 per cent off. But it was too late. As cash-strapped customers stopped spending, MFI had problems paying the rent, and even their own drivers and fitters. So it was no surprise when, last Wednesday 26 November 2008, the administrators were called in.

Customers and staff clearly upset
The next day, many customers headed down to MFI stores to find out what would be happening with their own outstanding orders. Many left doubting they would see either their original orders or their money again.

Elsewhere, customers were more scathing about the reason for MFI's downfall - blaming poor service. And it wasn't just anxious customers concerned by the news of MFI's move into administration. Some of the company's fitters were clearly upset too, claiming they were owed payment for jobs.

The brand lost focus
To some, the signs of trouble were clear to see. As branding expert Jonathan Gabay explains: "The market moved on, it's as simple as that. And the brand itself lost focus. There were other competitors coming in and MFI was losing credibility. And you know that when you get a brand that loses credibility the word passes from one person to the next person and you've got a problem."

For the moment, most of MFI's 111 stores are open - but for the sale of display stock only. Staff can't take new orders or give refunds. The administrators have already announced that 26 stores will definitely close but what will happen to the rest is uncertain, leaving hundreds of jobs at risk.

But Jonathan Gabay believes we may not yet have seen the last of MFI: "There has been reported interest from prospective buyers, so perhaps the MFI brand will, miraculously, survive. But it's all a long way from the days when this was a billion pound business - the biggest name in furniture."

Phil Duffy, speaking for the administrators MCR, had the following to say: "This is a difficult time for all parties concerned and we are doing everything we can to ensure that the best result for all creditors is achieved."

The announcement on 27 November 2008 that MFI had gone into administration left many customers uncertain as to the fate of their orders. However, finding out more, certainly in the next few days, may prove difficult. The most up-to-date information can be found on the MFI website and on the administrator's website - MCR.

Current installations and future orders
According to the latest information provided by the administrators MCR, all installation works have been suspended until further notice, as they continue their review of the company's position. No further customer orders are being taken and, although the MFI stores remain open, it's for the sale of display stock only.

Scheduled deliveries due up to 7 December 2008
Orders due for delivery or installation between Thursday 27 November and Sunday 7 December 2008 have now been cancelled.

Customers who paid by credit card are encouraged to contact their credit card providers directly in order to seek a refund.

Those customers who paid by cash, debit card or cheque will be contacted shortly, to advise them as to the status of any possible refund.

Scheduled deliveries due on or after 8 December 2008
Customer orders due for delivery/installation on or after 8 December are still being assessed as to whether or not they can be fulfilled. Further details regarding the fulfilment of those orders will be posted on the MFI and MCR websites as soon as this information becomes available.

MCR says that as soon as the position becomes clearer customers will be notified accordingly.

Finding out more
It's worth noting that customer order queries are not being handled by the stores. Stores are also unable to deal with any refund queries.

By telephone
The customer service numbers remain open daily from 9am to 6pm, but again can not give any further details regarding specific orders. The numbers are 01405 744813 during the week and 0870 607 5054 at weekends. The call centre is experiencing a very high volume of calls, so if you do decide to call it may not be possible to get through on the first attempt.

By email
You can also email your query to customer.services@mfi.co.uk. Again, due to high volume of enquiries, and the ongoing review of customer orders, it may not be possible to reply regarding your specific order at this time. There is a high volume of emails and therefore it may take several days to provide you with a reply

Alternatively, if you need to contact the administrators you can do so by emailing the dedicated address mfi@mcr.uk.com. They say that one of the administrators' team will endeavour to deal with your query as soon as practical but that the office is presently experiencing a high volume of emails.

Watchdog update Monday 22 December 2008
The MFI administrators are providing up to date information and advice for customers on the MFI website, which includes what procedures customers with outstanding orders should follow.