Since May 2016 when it became clear that there was little or no hope for the future of British Home Stores (BHS), that venerable British retail brand, the vultures have been lurking. The final stores closed at the end of August and it begs the question as to what happens to all of that physical retail space?

The large pension “black hole” (approximately £600 million) and how the 11,000 employees might be helped in that regard, has captured the main thrust of media speculation. Its previous owner: Sir Philip Green has been castigated for his apparent casual indifference to their plight. Rumours are on-going about various rescue attempts to address the pension issue.

What interests me is what happens next.

Is it likely that anyone will take over this distressed brand and attempt somehow to rejuvenate it? As discussed in one of my earlier blogs on the subject this brand has been faltering and struggling for a number of years. This is partially due to under-investment in the stores and merchandise. A more basic explanation for its struggles lies in its inability to respond to the changing needs of the market – particularly with respect to the lack of distinctiveness of its product range, its “middle-of-the-road” price points and a general dowdiness associated with its physical store formats

Since the announcement of its imminent closure in May 2016, a number of retailers have been rumoured to have expressed an interest in using some of the stores. These include IKEA. In its case it is keen to roll out more of its “order and collection points” and these need to be located nearer to city centre / high street locations in order to appeal to shoppers and workers who wish to collect items that may have been purchased online. This new format also provides the opportunity for shoppers to browse through the electronic version of the catalogue electronically. IKEA can also showcase a limited range of items within the store.

Sports Direct are also rumoured to have expressed some interest in moving into to some stores.

At the end of September a Polish retail brand; Reserved (part of the LPP retail chain) took over part of the 30,000 sq. ft Oxford Street BHS site. It signed a 25 year lease with BHS earlier in January 2016. This is a largely Eastern European operation and operates in eighteen countries with brands such as Tallinder (an upmarket fashion brand) and Cropp (aimed at the young to teenage market). Recently LPP has located outlets in the Middle East (Egypt, Qatar and Kuwait.

While it has a strong presence in countries such as Poland, Russia and the Baltic regions, its long-term goal is to expand its brands across Europe and further afield. The Oxford Street location is seen as an ideal opportunity to showcase the Reserved brand in a prime shopping location in the UK.

It closely resembles Zara and H&M in terms of its merchandise, price points and design. It designs its product range in Poland but the clothing is primarily manufactured in China and India. We will monitor its progress over the coming months here on this blog site.

While the opportunities for a revival of the BHS brand via its physical stores looks remote in the extreme, we should focus more of our attention on the possibilities of brand revival via the online channel route.

This area raises some interesting questions and developments. At the end of September 2016 BHS underwent a relaunch of its online operations. It has identified its target market as the older female (over thirty-five) and who does not have the time to make specific shopping trips to purchase clothing items.

They certainly cannot be faulted for picking up on the inexorable move generally towards shopping online.

It started off with a limited range of items (approximately 500) spread around three categories: lighting, bedroom and bathroom. At the end of October it plans to extend this range to cover Christmas-related merchandise, including a range of hampers and fragrances.

It is further ratcheting up the selection with items in the kitchen and dining categories as well.

It would appear as though it is incrementally widening its product range to become a meaningful player in the online channel sector.

Its new owners the Qatari-based Al Mana Group seems to be determined to resurrect this brand from the grave in an attempt to re-establish it in the minds of shoppers. How difficult is this challenge likely to be? Would it be wiser and less painful to let the brand die gracefully and with dignity? In some ways it is akin to pumping life into a beloved pet that is suffering in its old age.

Undeniably it will be difficult. The BHS brand has suffered over the past fifteen years from a lack of investment in its physical stores. While this alone has damaged the brand, more alarmingly it appears to have lost resonance and relevance with the target market. Its merchandise – particularly in clothing, has failed to keep up with the times and its value proposition became lost in the so-called “new era of retailing”. Relentless negative publicity has not helped either – particularly with respect to the behaviour of its previous owner: Sir Philip Green.

Will its slightly older target market (35+, predominantly female) respond positively to the online offerings?

It can be argued that BHS has one thing in its favour; a residual (albeit relatively small) level of positive perceptions and associations in the minds of its loyal shopper base. A quick review of the media coverage on the BHS demise suggests that there is a lot of sympathy with respect to the overall decline and disappearance of BHS from the high street. Anything is possible – particularly if this level of positivity can be captured and inspired by a relevant product offering on its online channel.

However I would counsel against BHS relying on history and heritage alone in attempting to attract shoppers to its channel. It has to face the challenge of providing a relevant, coherent and consistent value proposition that in some way or other provides a point of differentiation form fellow online and omni-channel retailers that compete in this space. That will not be easy.

All the evidence indicates that breathing life into a dead brand will take a long time. Even brands such as Skoda which were not dead but struggling, took ten years or so to reposition from a “cheap and nasty” car to a mid-range position in the market-place. This happened largely because of the influence and heavy involvement of a successful manufacturer – Volkswagen in key areas such as design and marketing.

Developing a point of differentiation is critical in the chase to be successful once again for BHS. The online channel in fairness allows it to experiment initially with limited ranges so that it can test out designs and price-points with its customers. It avoids the burden of having to maintain and fund a large number of physical stores.

Overall I would have my doubts about its long-term viability. Let’s see what happens over the next couple of years. What do you think?


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