Four ways Retail Acquisitions can transform the ailing BHS brand
With today’s news that Arcadia tycoon Sir Philip Green has finally sold BHS to Retail Acquisitions, we look at how the consortium, set up by financier Keith Smith, can turn around the ailing BHS brand, which has struggled for profitability over recent years.
![](https://marketingweek.imgix.net/content/uploads/2015/01/BHS.jpeg?auto=compress,format&q=60&w=736&h=433)
Rethink clothing
In a clothing market that has become increasingly focused on value fashion from the likes of Primark and H&M, the clothing ranges at BHS are arguably not the most trendsetting in 2015.
Although the iconic British brand was sold debt free, it is still fighting to stay relevant with consumers. In 2013, it lost £69.6m on £675.7m of sales, of which clothing remains a primary driver, down 3.5% on the previous year.
Company filings also show BHS made a cash loss of £21m in the year to August 2014, up from a £19.3m deficit the previous year.
“BHS as a brand has lost traction and struggled to rid itself of a dowdy image at a time when its older customer base has become more aspirational and fashion forward,” said Neil Saunders, managing director of Conlumino.
“BHS and its new owners will need to justify their place in the market by offering consumers compelling ranges.”
Whether Cara Delevingne will start to crop up in BHS campaigns is debatable but evolving its clothing offer and returning to screens – digital or television – sooner rather than later could be a wise move.
Refocus on the young
BHS is still performing well among older customers, but not well enough, according to Simon Horner, head of fashion at Kantar Worldpanel.
He estimates that BHS has lost almost 800,000 shoppers over the past five years, who have switched to supermarket clothing and the likes of TX Maxx.
And although half of BHS sales still come from the over 55s, he adds with caution: “The older age-group is choosing to follow younger fashion trends so BHS will need to refocus its offer to continue to appeal to these shoppers.”
Translation: BHS, and the design of its stores, needs to get hipper.
Sort out BHS Food and online
Last year, citing research that 80% of BHS customers wanted a food offer, Sir Philip Green seemed convinced that the department store was ready to take on Tesco and Sainsbury’s on convenience.
But the plans, to convert 140 of the BHS 200-plus estate to include a convenience BHS Food shop, now look like they were more of a shop window exercise to potential buyers.
With a few dozen stores currently hosting a 3,000 sq ft BHS Food fixture, the brand must now decide on a clearer vision for the offer if it is to consistently drive footfall.
After all, the shops, which look like a mixture of Poundland and One Stop, aren’t the most aspirational and could hold back any attempt to produce more upmarket clothing ranges.
With UK online sales of non-food up 8.3% in February, according to the British Retail Consortium, a more attractive online proposition would also help BHS reckons Joshua Raymond, chief market strategist at broker City Index.
“BHS has struggled to adapt to the digital age and increasing competition on the high street,” he adds. “The challenge Retail Acquisitions now faces is monumental.”
Recruit the right chairman
Retail Acquisitions plans to keep the BHS management structure in place but will appoint a new chairman in due course, with former Thomas Cook chief executive Harriet Green reportedly already approached.
Keith Smith, the chairman of Retail Acquisitions Ltd, says a new chairman “with significant retail experience and further retail turnaround experts (will be appointed) in due course”.
“This is a fantastic opportunity to breathe new life into this iconic British high street brand,” he added.
“We are convinced that with strategic and focussed support we will return BHS to profitability, and safeguard the workforce.”
However, some analysts think whoever comes in is facing a losing battle.
Richard Hyman, the analyst who runs the Richard Talks Retail website, told the Financial Times that the deal was “the next stage in the closure of the business”.
He added: “Can the new owners run a leaner operation than Philip? This is as inconceivable as the idea that BHS can start to win back market share.”
A knockout appointment, such as a Kate Bostock or Archie Norman, could be key to reversing the views of the many doubters.