BHS: Two Lessons For Every Business

Iconic retailer BHS has entered administration this morning, putting up to 11,000 jobs at risk, making it the biggest retail casualty since Woolworths.

This sad news comes as no surprise however. Ever since Retail Acquisitions – an investment vehicle apparently comprised of people with no retailing experience – bought BHS from Sir Philip Green for £1, it seemed likely that this was merely a stay of execution.

Since Green had decided that there was no more to be done with the business, it’s hard to understand how RA could think they could do something Green couldn’t. The clue, of course, was in the price: if I’d been offered the opportunity to buy a 160-store chain, a heritage brand employing 11,000 people, for £1, I’d like to think I’d have wondered what the catch was.

Of course, the catch was, in part, the inevitable pension fund hole; however add to that the unsustainable rents BHS was paying for many of its locations, declining sales and formidable competition, and you would conclude that the real catch was that BHS no longer appeals to the British retail consumer. Reinventing BHS therefore was the fundamental challenge for its new owners.

Focusing on cutting costs was like trying to repair the leaking hull of a sinking ship: essential to do that, obviously, however the more fundamental strategic issue was the fact that the ship was on the wrong course – and the new captain clearly did not have the navigation skills to rectify that.

There are two obvious lessons here:

  1. Due Diligence means what it says: you cannot be successful unless you have 100% clarity around the problems and the relevant skills to solve them. Retail Acquisitions apparently had neither.
  2. No business can take its consumer for granted. Understanding demographics, psychographics, and the key trends (global and local) likely to impact consumer behaviour, is the essential starting point for any strategy. Only then can you create  and deliver a compelling, sustainable offer to your customers.

The demise of BHS is a very sad story, with a considerable human cost. It is one, however, that could have had a different outcome – had anyone cared enough, understood enough, and then invested enough to reinvent the store for the 21st Century. And that, in summary, is what every consumer-facing business must be prepared, and equipped to do.

Source: BHS enters administration, putting 11,000 jobs at risk – the biggest retail casualty since Woolworths | City A.M.


Stephen Spencer is a keynote speaker, business coach and consultant, helping organisations create better Customer Experiences to unlock team and profit potential. He has over 25 years’ experience as a leader, trainer and experience developer with some of the UK’s most prestigious Retail, Tourism and Hospitality brands. Sign up for Stephen’s POSITIVE Customer Experience newsletter here.

Join the discussion!

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s