BHS Stores – Yet Another British Retail Death?

Other businesses will suffer the same fate as BHS if…

Another one bites the dust. BHS in serious trouble.

Another one bites the dust. BHS in serious trouble. Picture:

Back in the day, I use to own a nice collarless shirt which I got as a gift from my Aunty. It was one of those shirts you use ‘forever’; I think I had to give it away to charity in the end. BHS, where that shirt was gotten was one of my favourite high street shops, but according to reports that came out yesterday it has gone into ‘administration’. In simpler terms, BHS can no longer afford to pay its debt, its staff and other obligatory payments and has now been taken over by a court appointed administrator who will be tasked with finding either a BUYER or call for the company to be completely DISSOLVED. Whatever the case, when a company goes into administration, it only means one thing – it marks the beginning of the end of the business.

Make no mistake, the face of British high street is changing and changing rapidly. Remember Woolworths? Closed. Comet Super Stores? Closed. Phones4U? Closed. And now BHS? Something crazy is going on in Britain. BHS has been trading for 88 years and just like that they might go under. I can hardly believe my eyes!! The other day, I drove past my high street here in East Anglia and shops I visited just last year have gone under – Cafe Rouge, Cafe Aroma and a Pizza delivery joint (which actually belongs to a friend) even my local organic shop as well as the local Vegan grocery shop all gone (or going) under. Closed! Bust! Ka-put!

This plague is sweeping both Small Businesses and larger retailers alike and to be honest, it puts the frighteners on anyone with ambitions to launch a high street shop. Thankfully, I gave up that idea after I did an in-depth market research and realised there is just something wrong with the business environment particularly in East Anglia.

BHS has been opened for 88 years with 164 stores and 11k staff. Are you telling me that with that amount of experience and staffing resources at their disposal, BHS couldn’t keep a flagship company afloat? It really is bizarre. Why though? What are the likely causes for these failures? There is obviously a lot that meets the eye with this recent victim, and what I mean by that is that there must be quite a lot of other hidden reasons why this company might painfully go bust. However, there are also very glaring reasons and it has been glaring for a long long time. PATRONAGE! its obvious isn’t it? The only reason your business won’t survive is lack of patronage; Pure and simple.

Some of these other factors also contributed to BHS’ present predicament:

British Business Environment: Surely, there is something about business in this country that means they increasingly stand a chance of failure. I am sick and tired of all the chatter from government about how they help businesses in this country. They think they do, BUT THEY DON’T. In the end, directly or indirectly government end up stifling businesses with their incessant thirst for taxes, red tape and general lack of care. If businesses contribute more than 47% to this country’s economy why they are not being looked after like they truly matter? I wonder.

Competition: Oh God, there is so much out there. There are alternatives everywhere you turn. To make matters worse, some of the competition practice what is called COST LEADERSHIP. Meaning, they solely exist to be the cheapest in the market. BHS had no chance in this regard. They simply didn’t move with the times and got left behind.

Technology: The biggest players out there constantly innovate. It is a MUST!  Amazon for example can not only deliver your order on the very same day, they can also deliver it to a nominated store or pick up point of your choice. Tech is simply a necessity these days. From Apps, to responsive websites, most companies have embraced technology. Unfortunately, in this regard, it seems BHS stood still.

Higher than normal expenses: BHS has debts of more than £1.3bn, including a pension fund deficit of £571m. Utility, Salaries and even pensions, it seems BHS’ expenses ended up consuming it.  Their incoming simply does NOT match their outgoing. It no longer does.

The exact cause of BHS’ predicament might not be clear, but it seems some of it is self-inflicted and the stewardship must be questioned. It says a lot if the former owner just bought a 300-ft luxury yacht  complete with Jacuzzis and state rooms.  That aside, it must also be said that the British business environment is just too hostile and it looks more likely that for your business to survive you must depend on luck as much as other factors.

I’ll leave you with this – recently, a friend and I explored opening a small fast food restaurant that would serve our local area. We envisioned a really small place that won’t even have seating for customers, just a place where orders can be picked up and delivered. By the time we had finished  factoring in all the necessary taxes, payments, staffing salaries and corresponding start-up costs, we were looking at a bill of £30k. Just to open a small fast food restaurant!!!

Starting up and sustaining a business in the UK really should be easier, shouldn’t it?

Kole Obasa

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2 thoughts on “BHS Stores – Yet Another British Retail Death?

  1. Looks like Mr Greene saw the writing on the wall as he sold BHS for £1!

    Obviously the growing importance of online shopping is hitting the High Street retail sector very hard
    but those who are pro-active at SBU level, have their finger on the pulse and are prepared to undertake rapid change and innovate are likely to not only survive but have a good chance of increasing year on year trading profits as well.

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