Update 25/04/16 – BHS has now filed for administration, with 164 stores and 11,000 jobs thought to be at risk.
This morning’s (03/03/16) news reports that UK retailer BHS have started insolvency proceedings (or ‘announced a groupwide turnaround plan‘ according to their own website) by filing a company voluntary arrangement (CVA).
BHS’ first go at asking their institutional landlords for reduced rents appears to have failed and the company now plans to close 40 stores unless their landlords agree that they can pay just a quarter of the rent. For another 47 stores the retailer is asking landlords for rent reductions of 25-50% in order to reduce rents ‘to market levels’ (or else…). Which leaves 77 unaffected stores that should continue trading in at least the short term.
It’s terrible news for the staff of the stores under threat of closure and not that great news for their landlords either. But I can’t say I’m surprised. The business was acquired by Retail Acquisitions in March 2015 after a lengthy period with a noticeable lack of investment in the brand by previous owners Arcadia. The new owners don’t appear in the last year to have been throwing money at the problem either – their new food offering came via a deal with Booker that basically handed over floorspace and they offloaded their cafes and restaurants onto Compass. But perhaps the new owners were too busy keeping the business trading and the bills paid (for example their suppliers had their credit insurance slashed as soon as the business changed hands) to worry about brand or the customer experience too much.
Because BHS stores are basically stuck in 1982 – and many probably haven’t been refurbished since then. They give @WHS_Carpet a run for it’s money in terms of patched up floors and ceilings, knackered display units and lackluster merchandising.
Not to mention the shopfloor staff who are very thin on the ground and, in my experience, poorly briefed about where stock actually is – one lady last year in their Leeds store when asked where I might find one of their surprisingly excellent and underpriced ladies white t-shirts waved in the vague direction of ladieswear and said “over there”.
BHS just hasn’t evolved like other retail brands have into something that can compete not only with a very savvy and scrappy high street and retail park competitor set, but with supermarkets and online too. To be honest, I don’t see how they have a future in clothing.
So what would I do with the business? Scrap clothing, sell or sub-let two thirds of every store, keep the food and cafes and use the remaining floorspace for homewares, which they are still pretty good at. There could well be a gap in the market for a budget homewares / lifestyle brand that isn’t Ikea, is on the high street, quick to physically shop and already a fairly trusted brand. What do you think?