No doubt you have seen the mass of articles over the past few days titled “BHS – what went wrong”, well to us that is clear. The brand does not have a unique product offer or proposition so, as a consequence of this there is no reason why today’s consumer would choose to shop there.
So let’s put all that aside. If by some miracle of chance BHS finds a buyer and manages to ride the storm, is there any hope for the brand? Well we think there could be.
For us there is only one thing that may still make BHS a desirable place to shop at, and that’s the home department (it is in the name after all).
It’s clothes offering has no identity, being attacked through the likes of Primark at the low cost end, and the likes of M&S and John Lewis at the higher quality end. Then there’s Debenhams and House of Fraser who have similar concessions that compete with BHS. Taking all this in to consideration, there is no reason at all for anyone I know to shop at BHS for their clothes.
To put it frankly, the recent introduction of a food offering has been massively misjudged. Do BHS think that someone who is shopping for their lampshade and towels is also going to think that they must get that jar of Branston Pickle that is running low in the cupboard? It works for supermarkets because you are doing your weekly shopping and happen to come across a nice lampshade you like. Not vice versa. The customer behaviour here doesn’t make sense.
However, there is significantly less competition on the high street for a homeware offering. Other than a trip to an out of town retail centre, when shopping for furniture on the high street, the likes of John Lewis, Next Home or even Laura Ashley offer a nice retail experience, but what they don’t have, is a massive range on show in store. Further to this, from all the anecdotal evidence and experiences we’ve heard about, BHS home ware is regarded as pretty good.
The market for this positioning does exist, Next for example, are increasing their ‘Home’ space square footage by 24% and have seen a rise in profits of 1.1% in their retail section from 2015-2016, having benefited from the high levels of footfall its high street stores attract.
The homeware market itself has grown in 2015 at the fastest rate in 8 years and is predicted to grow by 22.5% in the five years.
And look at the success of Dunelm, who have leapfrogged John Lewis to number one spot in the share of the UK home ware market. The brand’s success is attributed to being able to attract a wide range of customers, from students to pensioners, but crucially combing value with a product range that is not deemed as down market. Dunelm are also conscious of customer trends, having expanded its furniture range, with classic-styled pieces proving popular as Downton Abbey and period drama fans try to recreate the look of the television programmes in their own homes.
Before you think it, let’s address the story of Habitat, yes it failed, but it failed because it was considered expensive, whilst the quality of the products were hit and miss. You were able to get much better quality at Ikea, and you’d often pay less at John Lewis. Habitat’s positioning was all wrong.
As mentioned, the name says it all; British Home Stores, and they should embrace that, championing British designers in their product range, showcasing the best of affordable homeware there is to offer. Take a leaf out of Lidl and Aldi’s book, they are proof that quality and value are not mutually exclusive.
And finally, BHS need to offer a shopping experience that is second to none. Think of the millennial shopper out on the town for a Saturday with friends, wanting to look at something nice for their new house. Make no mistake, online and mobile channels are important to millennials, providing the information and insights they need to find the best products and services, but there’s the internet, and then there is the shopping experience. And that can be BHS’s strength.
According to research by Accenture, many members of the digital generation actually prefer visiting stores to shopping online “You want to touch it; you want to smell it; you want to pick it up.”
There’s a reason so many retailers have increased their coffee shop offering (take Costa Coffee in Next and Waterstones, Starbucks in Selfridges and the M&S café as examples). People want a destination, not just a shop. With its existing store footprint BHS could really achieve this.
So the question we’re still asking is, why would you go to BHS and not John Lewis or Debenhams? And that has to come down to a clear brand proposition supported by a product range and experience to match.
Yes there is a lot of work to do to make the above possible, a lot of understanding of customer trends and aspirations and without doubt a lot of investment. But we think there is a gap in the market that BHS can exploit. However, whether that will happen and an investor who is willing to take the challenge on comes forward is another story.