Administrators this week pointed to the changing nature of the British high street as they announced that BHS was to go into liquidation with the loss of up to 11,000 jobs.
The move comes in the same week that Austin Reed went into liquidation after 116 years trading and with the loss of about 1,000 jobs.
This latest news has sparked closing-down sales across BHS’ 163 stores over coming weeks – with the website currently offering 50% off products. Administrators Duff & Phelps hope to find buyers for the stores. Although offers for the business itself were made, none had enough working capital to secure the future of the business, administrators said.
Philip Duffy, managing director of Duff & Phelps, and joint administrator of BHS, said: “The British high street is changing and in these turbulent times for retailers, BHS has fallen as another victim of the seismic shifts we are seeing.
“The tireless work and goodwill of the existing management team and employees of BHS with the support of my team were not enough to change the fortunes of the company.”
Some 8,000 people are employed directly by BHS while a further 3,000 work in third-party concessions within the stores.
Just days earlier, Austin Reed’s website stopped taking orders as administrators moved to wind up the formalwear company with the loss of about 1,000 jobs.
Administrators from AlixPartners said that they had only been able to sell five Austin Reed concessions, which trade within branches of Boundary Mills, in a move that saves 28 jobs. They have also sold the Austin Reed brand, as well as that of its stablemate Country Casuals, to Border IP Limited.
That leaves stores in about 120 locations that will close by the end of June, and where about 1,000 people work. “We’re sorry,” said the company on its website, which is no longer trading. “We are currently not accepting new orders through the website. If you wish to purchase goods, please visit one of our stores.”
Austin Reed , a Top150 retailer in IRUK Top500 research, had been trading in administration over the previous five weeks, since the administration was announced at the end of April.
Joint administrator Peter Saville, of AlixPartners, said: “We have explored all options to sell the business since our appointment and continued to trade the business with the support of the secured creditors in what is clearly an extremely challenging retail environment. Despite a significant number of interested parties coming forward during this period it became clear as the process progressed that a viable solution which kept the business whole was not forthcoming.
“As a result we have made the difficult decision to cease trading the business and commence a wind-down of the estate. We would like to take this opportunity to thank all employees for their support and efforts during this unsettling period and wish them well for the future.”
Austin Reed’s heritage dates back 116 years. It opened its first shop on London’s Fenchurch Street, before opening a flagship store on Regent Street in 1911. The famous London shopping street has remained the home of its flagship store, although it left its original building in 2011.
Commenting on the news, Stephane Monier, VP, EMEA at digital experience management platform Jahia, said Austin Reed’s collapse was a reminder of digital’s power to connect – and divide.
“Brands cannot afford to rest on their laurels and rely on their heritage to survive,” said Monier. “It’s a question of being current and consistently meeting the customer where they are in their journey. As conditions on the high-street remain competitive, those retailers that do not have the agility to respond to evolving customer conversations and needs will be divided from the market and fall from the high-street.”
Jon Copestake, chief retail and consumer goods analyst at the Economist Intelligence Unit, said the news of both companies’ failure was a “significant blow for British bricks and mortar retail”. He added: “As with all fire sales, the best assets will no doubt be picked up cheaply and resurrected by more successful retailers, which will make some dent in the job losses, but many will not as the British High Street continues to undergo a painful correction to accommodate changing shopper habits.”
Commenting on the BHS failure, Jamie Merrick, head of industry insights, at Demandware said: “Consumers need retailers to be a ‘go-to’ for certain product ranges. Where you might go to Charles Tyrwhitt for suits and menswear, adidas for sportswear and L’Oréal for makeup and skincare products, BHS had a fundamental lack of brand identity that was its ultimate downfall.
“Brands need to carefully position themselves in the market so that shoppers know exactly what to expect when they walk into a store, or browse online.”
Our view: BHS, said its administrators, has failed at a time when the British high street is changing fast, while those for Austin Reed cited an “extremely challenging retail environment”.
True, high street retailers are now expected to keep up with a multichannel age that enables shoppers to buy in the most convenient way. But both BHS and Austin Reed seemed to be doing that, named respectively as Leading and Top150 retailers in IRUK Top500 research. Added to that, Austin Reed featured in the Top5 for merchandising in that report.
How can retailers expect to prosper in a world where even Leading IRUK Top500 retailers can fail? Both were well-developed multichannel retailers, and BHS’ #SaveBHS social media campaign has provided ample evidence of that retailer’s effectiveness, even if it does ultimately seem to have proved unsuccessful. But the pace of change means that today, efficient and convenient multichannel functionality is fast becoming a basic, rather than an added extra – and it seems highly likely that, as suggested by many commentators on BHS, issues in areas such as its depleted pension fund meant that extra investment in digital was hardly forthcoming.
By contrast, we’re reporting elsewhere this week on retailers that are making huge and important strides in improving the service they offer customers. Whether it’s 15-minute click and collect at Euro Car Parts, an app for personalised offers at Gap, or the single customer view being assembled by Halfords to power initiatives such as its use of personalisation, these are retailers who are zeroing in on what makes the difference to their customers. At the same time, brands such as True Religion are taking their products direct to consumers – and using digital to cut the amount of floorspace they need to do that.
All of this seems to say that it’s no longer enough to keep up with the changing nature of retail. Those that survive in the long-term will be strategising and investing to make sure that they are giving their customers the kind of service they want, and others will always be close behind if they don’t. It certainly is a difficult and competitive retail environment. Those listed in the IRUK Top500 have a headstart: the focus now must be on ensuring they continue to invest, to develop – and to make the most of it.
