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British Home Stores needs overhaul to survive

By Donald C McFetridge

Published 25/03/2016

Earlier this week, British Home Stores (BHS) managed to find a lifeline to continue trading when they received the support of 95% of their creditors to back a company voluntary agreement whereby their landlords agreed to reduce rents on 87 of their stores
Earlier this week, British Home Stores (BHS) managed to find a lifeline to continue trading when they received the support of 95% of their creditors to back a company voluntary agreement whereby their landlords agreed to reduce rents on 87 of their stores

Earlier this week, British Home Stores (BHS) managed to find a lifeline to continue trading when they received the support of 95% of their creditors to back a company voluntary agreement whereby their landlords agreed to reduce rents on 87 of their stores.

However, BHS is still trading in very difficult financial circumstances, with debts in excess of £1.3bn, which includes a pensions deficit of £571m. This latest restructuring will only partly solve their problems in the short term.

For years now, BHS has been struggling to cut costs, trim budgets and re-align themselves with more contemporary retail practices in order to avoid going into administration.

While dramatically reducing their expenditure is to be welcomed, there are far more serious problems at BHS.

One has only to read online bulletin boards to find out that their customers are far from impressed. Customers have labelled them as dull, dowdy, old-fashioned, out-of-touch and boring.

Even their core customer base (40-plus female shoppers who are "watching the pennies") has been radically reduced by the likes of Primark.

BHS missed a golden opportunity when Littlewoods disappeared from our high streets. They could have filled the gap left by the retailer if they had stepped in and benefited from customer switching. But they didn't - and that was where their problems really began to become more apparent.

With more than 10,000 employees and 164 stores on our high streets, they have a major stake in retail employment.

However, in spite of re-introducing food ranges into their product offering and attempts to re-brand and re-position themselves, they have failed to do so.

Customers make emotional responses to stores and brands, which can be classed as either "approach" or "avoid".

However, it appears that there are more "avoid" than "approach" responses to BHS at present.

What they must do now is radically modernise and re-align themselves with contemporary customer expectations in order to avoid becoming another Woolworths.

Donald C McFetridge is a retail analyst at Ulster University

Belfast Telegraph

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