When BHS entered into the CVA, Darren Topps CEO of BHS, stated that they do not have a sales problem, but they do have a cost problem. Naively said, Darren.
When Retail Acquisitions bought BHS for £1 from Phillip Green, there was a long stream of accounts showing that the retailer was in trouble, loss-making, tied by debts, a pension pot deficit, but they did have property. But even the sale of its flagship Oxford Street store was not enough of a lifeline to shore up the promised rescue package that was made when the business was bought.
The focus of the rescue package was all about the costs and sales were not given enough air time in the press or in the head office communications. A few weeks ago, we suggested that BHS would benefit from productivity modelling and that advice still stands. A prompt review can start to deliver cost savings, sales growth and profit growth within weeks. Could we have rescued BHS? Well, hindsight is a wonderful thing.
Given hindsight, where did BHS go wrong?
BHS changed its name (sort of) and its logo, but in terms of an offer to keep up with retail and customer trends, they were well off the pace. We are not talking about the last 2 years, we are talking about a decade ago, within Phillip Green’s ownership. BHS dragged their feet over going online, which left them playing catch up with their competitors, Debenhams and Next. But then the offer that they had to put online was not a leading offer, and their customers were not early adopters of ecommerce.
Simply put BHS did not adapt.
Now 11,000 members of staff are facing an uncertain future. There could be a buyout, but it’s unlikely. Any offers would have to be from experienced retailers, not from another conglomerate. The business now needs clear direction.
More likely is a piecemeal sell off of the stores to be used as strategic sites for other retailers like John Lewis, Sports Direct or possibly Next. Any remaining sites would be closed, and the BHS brand would disappear from our High Street.
As nostalgic as any of us might feel towards the brand, BHS needed customers that were shopping elsewhere. BHS lost relevance and the consequences are now apparent.