What must BHS do to survive its CVA revival?

BHS’ owners breathed a sigh of relief this week when creditors voted in favour of a Company Voluntary Arrangement (CVA) that will see rents cut on many of its stores, but this is just one small victory on the road to recovery.

The department store chain’s past has been somewhat chequered in recent history. Loss making for 7 years, BHS was bought by invesment group Retail Acquisitions for just £1 in March 2015, when retail Tycoon Sir Philip Green failed to revive its fortunes.

BHS’ chief executive, Darren Topp, has placed the blame for its latest poor performance squarely at the door of retail property prices, claiming the retailer’s problems are down to cost rather than sales.

The CVA will certainly ease some of this pressure, as 47 stores will have rents slashed by either 50% or 75%, while negotiations will take place to reduce rental on the remaining 40 stores (excluding those held separately by BHS Properties Limited) by 25%.

What’s more important, though, is that Retail Acquisitions use this lifeline to raise the capital needed to reinvigorate the BHS brand, as its lacklustre results are down to much more than rising costs. “The shops are tatty and the clothing lines dowdy,” remarked the Financial Times’ Jonathan Guthrie in his analysis of the situation.

However, Guthrie’s conclusion that “department stores have themselves fallen from fashion with shoppers” couldn’t be further from the truth. BHS has to look no further than John Lewis and House of Fraser – both of which pre-date the 88-year-old chain – to see two examples of similar businesses that have evolved much more successfully.

So, where did BHS go wrong – and what does it need to do in order to put it right? Certainly within omnichannel retail, the business has been caught napping. John Lewis and House of Fraser have put significant investment into their digital strategies, both in terms of online offering and promoting technology-led engagement in the store. House of Fraser has gone mobile-first with its website, while John Lewis’ retail app was recently voted third best in the UK. Both companies have invested heavily in click-and-collect.

In contrast, BHS has been driving down its margins even further with seemingly permanent discount promotions, and trying to diversify into new areas such as foods rather than reinventing its core clothing and homeware range.

Recently, though, there has been light at the end of the tunnel. The convenience food initiative is still in play, but BHS seems to have turned a corner with regards to prioritising what needs to change. 23 stores have already undergone a rebrand, and Topp has vowed to streamline its product range and focus on the brands which resonate with its customers. It’s also implementing an aggressive ecommerce strategy, to increase online shopping’s share of sales from 12% to 20%.

Interestingly, BHS has hired ex-House of Fraser brand marketing director, Tony Holdway, as marketing and creative director. He has already vowed to overturn the company’s lack of brand appeal and investment.

The fact that Holdway has jumped ship from House of Fraser is almost a bigger coup for BHS than the CVA. Having someone who knows how to run department store marketing, 2016 style, will help the retailer to shake off its outdated image and start embracing the omnichannel, multi-touchpoint journey to purchase that hallmarks modern retail.

One thing is for sure; if BHS doesn’t aspire to the relevance and agility of John Lewis and House of Fraser, it’s going to find itself back in the danger zone pretty quickly. And it would be a huge shame to lose one of the High Street’s most recognisable heritage brands.

The #manonthemoon isn’t just a test for John Lewis’ ad team

When does the festive season begin? For retailers it was months ago, but for much of the public, the Christmas klaxon has been sounded in recent years by the debut of John Lewis’ Christmas advert.

This year is no exception, with the launch of its #manonthemoon commercial, a poignant piece highlighting the loneliness and isolation that this time of year can be filled with for many (John Lewis has partnered with Age UK for the campaign).

I’ll leave any critiques of the advert to the marketing experts; what I want to focus on are the consequences of yet another hugely successful initiative for John Lewis.

Ultimately, however they tell the story, retailers release big budget ads because they want to sell more in the run-up to Christmas. All being well, they should see a fairly swift uplift in online traffic, which will filter through to the store as well.

The challenge for these businesses is to make sure the beautifully crafted brand image showcased in their Yuletide commercials is upheld when customers reach the shelf edge – otherwise their overriding emotion is going to turn from awe to disappointment.

Christmas shopping is a stressful activity at the best of times, let alone when shoppers can’t get the item they’re looking for, they’re forced to queue for a long period of time, or they struggle to get questions answered by overstretched members of staff.

Now, I’m not saying John Lewis is guilty of any of the above, but generally speaking, customer experience in the store is an ongoing challenge for the retail industry. In our recent report: why retailers and customers are becoming disconnected by the store network – and how to fix it,  we discovered that almost half of shoppers have experienced frustrations trying to get queries solved in-store, and looked into the significant impact this has on long-term relationships.

What makes depth of service even more critical at Christmas is the fact that many consumers aren’t buying for themselves this time of year. As a result, they’re far more likely to be asking questions about the products they potentially want to buy.

Christmas isn’t a particularly loyal time of year – events such as Black Friday and Cyber Monday encourage people to shop around for the best price – but a good store experience can make a retailer stand out from the crowd, and inspire a newfound advocacy into the New Year.

Equally, a worse-than-expected encounter can dampen the reputation that marketing departments and agencies have spent thousands (in some cases, millions) of pounds creating.

With click-and-collect purchases expected to soar to record levels this festive season, store associates are going to be under enormous pressure to serve time-poor customers in a satisfactory and timely manner.

So as the nation passes its verdict on Christmas ad season, let’s hope the retailers putting out these yuletide offerings have the network infrastructure to follow through on the brand promise their stories portray.