With an uncertain future ahead, the 88 year-old retailer, BHS, is now on the path to administration.
Brands can no longer rely on old marketing and retail techniques to survive, and BHS’s recent demise is simple proof of this occurrence.
Hung by a thread, each one of its 164 stores is likely to become a thing of the past; every ‘good’ thing comes to an end, so they say. But could this turn have easily been avoided? And are we looking at a true marketing story or, in fact, lack-there-of?
The Marketing Story
“We might love the BHS brand but when was the last time you shopped in a store? Lose sight of your customer and you lose sight of your business,” said Phil Dorrell, Retail Analyst, in conversation with the BBC.
Numerous UK high street retailers have failed to keep up with the times causing a recent cull of many much-loved shops, including the quintessentially British store, Woolworths. According to YouGov BrandIndex, BHS has been sitting shamefully at number 20 in the 46 biggest high street brand list, with an Index score of 12.1. That puts it well behind other department stores including Marks & Spencer, John Lewis, Debenhams, Selfridges, Harrods and House of Fraser – it’s clear to see that the sweeping changes of the internet proved to be a little too gusty for BHS to navigate, letting it trail in the wake of its competitors.
Combined with its lack of online presence, BHS has struggled to render itself as a successful customer-focused store and instead made its name highly irrelevant to its so-called target audience. Customers have forgotten why they should shop at BHS, meaning that the brand has some serious challenges in terms of changing its perception; with a small budget, BHS needs to stop expanding its offering in a desperate attempt to boost sales and, instead, focus on making its current offering relevant.
According to Neilsen figures, the company has been cutting marketing budgets for the last few years. 2015 saw BHS spend a mere £4.5 million (excluding online) on their marketing strategies, which is down by 49% in comparison to 2014. When this is put next to the figure spent by John Lewis in 2015 – that’s £25.3 million – you can really see how this relationship between digital marketing and business success becomes more prevalent.
Neil Saunders, managing director at Conlumino said: “BHS has a brand image which is seen as old-fashioned, tired and irrelevant to many consumers. This means that in a crowded and competitive marketplace BHS simply gets overlooked.”
“The attention has all been on the debts of the business but the ongoing strategy of BHS has been neglected. There isn’t a reason to shop there. The supermarket offers tick all the boxes that BHS once owned and without a radical change in proposition there just isn’t a space for BHS to occupy.”
The Polarisation Story
Within the UK, there is huge ongoing polarisation of the market in terms of value and fashion. According to PwC Strategy, the ‘performance of mid-market retailers’ (such as M&S) have been hit by the ‘outperformance of value specialists’ (such as H&M and Primark). Consequently, this means that luxury brands have continued to gain share and flourish as consumers look to invest in long-lasting products. On par is the consumer’s desire for cheap disposable clothes from value-focused stores.
This polarisation gap of the luxurious to the down-right affordable has produced a major dark cloud for brands such as BHS, who place themselves in the middle with no real selling point to its modern consumer base. To succeed and win in this in-between state, you really have to hit it just right with the ‘four P’s of product, price, place and promotion’.
BHS was a value retailer but it never did get it quite right; oblivious as it was, BHS managed to power through the years somewhat blind to this shift into polarisation. “So, BHS is not the best value brand in town. It’s not the best homewares brand around. It’s not the best fashion at a good price in town. It hasn’t got the best brand reputation. It’s not the sexiest and it’s not the most loved,” said Mary Portas, Retail Consultant and Broadcaster.
“I don’t think we will miss what it is today. I think we will miss what it was at a time when it was relevant. And I think we will miss the fact that it wasn’t made relevant. For great businesses like that it is all about the vision.”
The Pre-Digital Generation
BHS’ blatant ignorance to consider the opportunities of marketing has proven to be a significant contributing factor to its failure. With the rising power of e-commerce, alongside omni-channel strategies and the consumer becoming King, the digital world has shaped expectations and BHS has simply not met these demands.
“Many of the remaining retailers on the UK high street that have failed to move with the times, or that have lost their raison d’etre, have already been culled – either years ago, like C&A, or certainly since 2008…So BHS is the last of a pre-digital generation, in a way,” said Graham Soult, Retail Consultant.
Darren Topp, Chief Executive of BHS, has claimed that he wants to make the store an ‘iconic British brand’ again, despite its recent failures to climb out of bankruptcy. One way of doing this could be to attract the younger generation and follow the lead of M&S which has now aligned itself with influencers, such as Alexa Chung.
“Their problem is their trading offer is in the 1980s…Their stores look a bit dated. They are behind the times,” said Dorrell, in conversation with the BBC.
The Iconic British Brand
After its saving vote from bankruptcy - thanks to creditors who voted in favour of a survival plan - BHS is in serious need of marketing investments. To gain even the slimmest chance of becoming the ‘iconic British brand’ it once was, Darren Topp and his team will need to explain to shoppers why they should be visiting their stores.
Overall, there are clear opportunities for retailers, like BHS, to embrace in digital. But, sadly, there are still many traditional retailers out there who are stubborn and ignorant to the ever-changing face of retail, both off and online, and in each deep breadth of the market. But let’s be honest, does BHS have the time to reinvent itself? And does it even deserve a second chance?
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