British Home Stores (BHS) - A Marketing Analysis

Introduction

 

BHS logo

British Home Stores opened their first store in 1928 in Brixton London. It was seen as the British rival to American Woolworths. At the time the plan was to sell everything at a shilling (5p in today’s prices). At its peak BHS employed 12000 people. In 2000 Retail entrepreneur Philip Green purchased BHS for £200m from Storehouse PLC , which owned Mothercare and Habitat. In 2015 Philip Green sold BHS for £1 to Retail Acquisitions because of the heavy losses that were occurring. On Monday the 25th of April BHS went into administration because of the continuing losses. After an 88 year history of trading (many of which have been very successful) what went wrong?

British Home Stores Marketing Mix Analysis

Product

The weakest part of British Home Stores product strategy was their Brand. Whilst their UK competitors have a clear brand identity e.g. John Lewis stands for quality, Primark is quick fashion for a low price. BHS did not have a clear brand proposition was it price? quality? convenience? or value for money?

The product mix offered by BHS was incorrect. Customers felt that product variety was poor compared to rivals such as John Lewis and Debenhams and the quality for the price charged did not meet customer expectations. Their product range did not capture the public's imagination, it's difficult to get excited about a soft towel.

BHS' strength of offering customers a constant product and brand became its weakness. Competitors adapted their product and brand strategy to reflect changes in consumer "wants and needs" but BHS stood firm, rigidly sticking to the brand values the company started life with. In a viciously competitive market place the refusal to change proved to be BHS' downfall.

Price

It is difficult to define BHS' pricing strategy.  Many consumers felt that rivals such as Primark and supermarkets offered better value for money.  Conversely their products couldn't command the prices charged by high end retailers such as House of Fraser and Selfridges. In fact many consumers would not even put them on a par with mid range product price retailer Marks and Spencer.

Place (Distribution) and Physical Environment

Marketing mix place strategies is about how an organisation will distribute its products and services to buyers. The most common complaint from consumers was about BHS' outdated stores, you could walk into any BHS and feel you had been transported back 10 - 15 years. The majority of BHS Stores are not fun , bright or dynamic; overall they are not a pleasant shopping environment, which leads to a poor shopping experience. Successful retailers have ongoing refurbishment programmes for example McDonalds continuously test out concept stores and update their stores with different colours, styles, layout and services. Even McDonalds' toilets continuously change and are designed to be fun, convenient and bright.

BHS faced competition from all levels including retailers distributing their product online such as leading online clothing manufacturer ASOS and those with standard bricks and mortar outlets. BHS charge for home delivery unless you spend a minimum amount and "click and collect" can take up to seven days. This is in stark contrast to retailers such as Asda and ASOS who offer free next day click and collect.

Promotion

Do you remember a BHS promotion? In a market that is crowded it is important to get your message across to your target market and the media, BHS failed to do this. The sad thing is that even window displays, email notifications and online promotions promoting sales with big savings it did not generate enough sales to sustain the company.

Segmentation Strategy

BHS failed to segment the market and focus on a core segment. It was unclear whether they were targeting the price sensitive buyer, or those willing to pay more for a quality product. By not having a clear segmentation strategy BHS failed to discover what consumers loyal to their brand "wanted from them". BHS offer a range of products from clothes (men, women, children) to home ware, lighting, furniture and Christmas products. With such an extensive product range its important to conduct effective research and segment the market based on the type of consumer likely to be interested in your brand.

Porter's Generic Strategies and Stuck in the Middle

Without a clear cost leadership or differentiation strategy many would say that BHS fell in the trap of being "stuck in the middle" as defined by Michael Porter.  This is a dangerous place to be as you end up spending resources on a number of strategies instead of focusing on the most effective. When you are "stuck in the middle" you do not stand out from the crowd; with a crowded retail market place you need to stand out from your competitors.  Successful retailers have differentiated themselves from others for example ASOS are known as the leading online clothes retailer and John Lewis Partnership stand out for their excellent customers service.

Conclusion

There are a number of reasons why BHS failed. They refused to keep pace with a fast changing market place. They seemed unsure about what they were offering the customer and attempted to do everything for everyone. By the time they discovered their mistakes it was too late the market had moved on and consumers were no longer interested in them. Only a massive change in strategy and large investment can pull BHS out of administration.





 

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