After reading countless articles jeering the demise of the ‘iconic’ BHS, I can’t help but think that the company had it coming for a long time.
Not to sound too harsh, I deplore the loss of 11,000 jobs, in which staff worked as hard as they could, going the extra mile to save the ailing business.
Let me be clear, it’s the company’s top brass that got it terribly wrong and I can only hope that most staff can find jobs in the companies that come to replace now vacant BHS stores.
Failure to invest
Sir Phillip Green knew what he was doing when he sold the company for £1 to a group of inexperienced ‘entrepreneurs’. He was abandoning a sinking ship, unwilling to go down with it or to invest some of his £5.8Bn fortune to revive the BHS brand and offering.
The firm ultimately collapsed after its new owners failed to secure £70m for a turnaround. £70m I’m sure that would have been easily found from Sir Green’s fortune.
In the end, potential investors and lenders knew that BHS was dead in the water and refused to back an ailing brand that lost its significance with customers a long time ago.
What was BHS’s brand in the end?
The artificial changes that the purchasing group made in its final days simply weren’t enough.
Whilst the new branding (1) was a nice touch it was already too late, a cosmetic measure for a company critically burdened by high overheads and an astonishing pensions deficit.
It does raise the question as to the company’s identity in its final few months. The new BHS(1), Bhs (2) or British homestores (3)?
The failure to establish a consolidated brand that customers could identify with was symptomatic of a complete failure by management to make the retailer relevant again.
As confused as they company’s branding was its in-store offering. Instead of focusing on its core offering the company expanded its offering in a desperate attempt to gain market share. BHS moved into Perfume and food, further confusing consumers and moving into already occupied territory!
Its venture into food was somewhat bizarre as rival M&S already dominated this space. Their confused venture was defined by their stocking of discount Happy Shopper products alongside ‘premium’ brands. A perfect symbolism of the company’s failure to settle on its offering and identify its target market.
Its perfume offering also ventured into a space already dominated by Debenhams and Boots. I’m shocked at what value management thought they could add by stocking perfume alongside homewear.
In the end, instead of focusing resource into branding and customer initiatives the company expanded and was left severely outgunned by rivals Debenhams, M&S and John Lewis.
Just take a look at advertising spend;
Not surprisingly the underinvestment in the company’s brand and offering lead to an abysmal YouGov Brand Quality Metric with the company achieving a score of 12.3, way behind rival Debenhams (38.8) and M&S (59.5).
What next for BHS stores?
In the end, BHS ended up like Woolworths, a tired brand that failed to move with the times. The attempts to offer everything ultimately lead to delivering on nothing and now customers can look forward to useful and significant offerings on the highstreet.
As, of the ashes of the old Woolworths, companies such as Poundland, B&M bargains, Iceland and Wilko came to occupy the derelict stores the same will happen again.
With countless online polls showing shops such as H&M, Zara and GAP as prefered occupiers for BHS stores I expect the reality to be harshly in contrast.
It will be retailers such as SportsDirect, Poundland, B&M bargains, Home Bargains and Primark that will rise from the ashes. These are the growing brands of today’s impoverished demographic still scared by 2008.
As we can see from the below table from Satisa which outlines acquisition of stores out of bankruptcy by company between 2009 and 2014, the preferred pics of the public are nowhere to be seen.
The demise of BHS gives us no more detailed insight into the state of the UK’s retail sector as Woolworths did.
Being an ‘Iconic british brand’ just doesn’t cut it.
Stores must offer an appealing core offering and value for money.
When faced with troubles, the answer is consolidation of core offering as opposed to expansion into various offerings.
As bitter a pill as it may be to swallow for those with disposable income, Poundland is the future of the empty BHS stores as they were with Woolworths.