The BHS brand was thrown a lifeline this week (23 March) when creditors voted in favour of a so-called company voluntary arrangement (CVA) that would save it from insolvency, at least in the short term. At a meeting, more than 95% of landlords and suppliers, among other creditors, voted for a move to cut its rent. It claimed it would have gone into administration if the plan had not been approved.

The approval of the CVA is only a short-term fix, however. The company, which is owned by Retail Acquisitions, has a pension deficit of £571m that needs to be sorted and will need more money to invest in modernising its operations.

Nevertheless, Topp was optimistic. Speaking at the event he said, according to the Guardian: “We are delighted that we have the support of landlords and creditors. But we are under no illusion. This is the start. Me and my team now have to roll our sleeves up.”

“We want to make [BHS] an iconic British brand again. We would like the British public to give us a second chance. Come and see our stores and you will be surprised.”

Darren Topp, CEO, BHS

A brand in decline

BHS has made some attempts to refresh the brand. It has opened food halls and expanded its offering into beauty and fragrance. But Cecylia Grendowicz, strategist at branding agency Brand Union, says the moves have left the brand looking desperate.

“The problem for BHS is one of image. A broad and multifaceted offer works very well for department stores like John Lewis and Debenhams but in the case of BHS it smacks slightly of desperation.

“Combine this with the fact that the company has been very reluctant to spend on marketing and we’re left with a retailer with a huge, varied offering that no one knows about or loves enough to engage with,” she explains.

That reluctance to invest in the brand can be seen in its marketing spend. According to Nielsen figures the company invested just £4.5m in marketing (excluding online) in 2015, down 49% on the year before. Debenhams spent almost four times that number and John Lewis close to six times.

Ad spend (excluding online) 2015 2014 Change
BHS £4.5m £8.8m -49%
Debenhams £16.1m £19.3m -17%
John Lewis Partnership £23.5m £30.4m -23%

That has translated to customer perceptions of the brand. According to YouGov BrandIndex, BHS sits 20th in a list of the 46 biggest high street brand with an Index score (a measure of a range of metrics including quality, value and reputation) of 12.1. That puts it well behind other department stores including Marks & Spencer, John Lewis, Debenhams, Selfridges, Harrods and House of Fraser.

It has also underinvested in its online operation. Its delivery and click-and-click offerings are by no means market leading. For example its cut-off for next-day delivery is only 8pm where others, such as Next, will take orders up until midnight.

At a time when competition from the likes of Amazon and Asos is rising that underinvestment is crucial.

Neil Saunders, managing director at retail analysts Conlumino says: “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.”

Changing ingrained perceptions

Changing that perception will be a “real challenge”, according to Saunders. That is made even harder by scarce financial resources, with a small pot of money needing to be stretched a long way.

Grendowicz suggests BHS stop expanding its offer in a desperate attempt to boost sales and instead focus on making its current offer relevant. It needs to attract younger consumers and could do well to follow the lead of Marks & Spencer which has aligned itself with influencers such as Alexa Chung.

It will also need to give its brand a facelift. Customers have forgotten why they should shop at BHS. The retailer must remind them by coming up with a differentiated brand and communicating it to shoppers.

Topp says he wants the brand to be “iconic” again but this will require some real investment in marketing and even then it may not be enough.

As Saunders concludes: “Changing ingrained perceptions will be a real challenge. Even if positive changes are made these will take time to filter through to consumer habits and the balance sheet. The key question is does BHS have enough time to reinvent itself?”

  • James T

    BHS can absolutely turn it around, and I hope they do. However, it will need to fundamentally think differently about what it is and how it is perceived IMO. Its range is out of date doesn’t really speak to anyone in particular and they have absolutely nothing for a millennial generation in their shops. On top of this, the brand seems to stand for very little in terms of context. When you go into their out of town stores, they seem more like the Range than Debenhams (which has similar issues if truth be told,) and their city clothing stores look genuinely archaic.