News Analysis: Major British retailers collapse for being behind times

A failure to move with the times has led to the collapse of the major British department chain BHS and the closure of fellow retailer Austin Reed at the end of this month.

Both BHS and Austin Reed, a fashion outfitter, are longstanding and substantial presences on the British high street. Their demise indicates a seismic change in the nature of high-street retail in Britain.

NO CLEAR DIRECTION

BHS had lost its way, and the company and its staff would now pay the price for having no clear retail purpose, Nick Tate, head of new business and marketing at Naked Communications, told Xinhua on Friday.

"I think in the end, unfortunately for BHS, its products became diluted because it wasn't guided by one single consumer-centric purpose and failed to modernize against the kind of shops and retail experiences that shoppers now have," said Tate.

"Because it did not have this guiding North Star as its purpose, it led to decisions that did not work for the best interests of the company and to the detriment of the staff," he added.

Chris Barker, a headhunter for the kind of executives who run firms like BHS, echoed Tate's point that BHS had no clear direction.

"It has really lost its heritage. It's lost its meaning in terms of value and product, and the emergence of supermarkets as nonfood entities has really taken its toll on the business," he told Xinhua.

The reason why BHS went under, said Tate, could also be attributed to its management.

The company had several new management teams and a management who instead of making value for their customers, were looking for ways to potentially strip costs out of the business, Tate said.

FAILURE TO TRANSFORM

For Barker, BHS failed to shift its business into models of multichannel delivery and e-commerce amid fierce competition in retail market.

"It's mobile phone responsive websites, mobile apps and things of that nature. If you look at some of their competitors -- even fashion firms like River Island, or sports firms like JD Sports -- that link between digital and the instore experience is where BHS has failed to jump on the boat and to get with the customers," Barker said.

Tate said that BHS had an online presence to face digital challenges, but its positioning was fatally flawed. "(Digital) gives you more avenues to sell to your customers but you can only do that if you understand the overall value that you are trying to sell to your customers."

A business model that would have worked 15 years ago, when many went to BHS to buy school uniforms, for instance, has been challenged by cut-price retailers and value-focused supermarkets, which are facing their own challenges in highly competitive markets and are seeking sales anywhere.

"Now you are picking these things up at supermarkets for good value prices. The walk-around stores are very dated," said Barker.

Barker criticized BHS' lack of vision over recent years, with the firm resorting to the "same-old, same-old" retail offerings.

"I would question the quality as well. It was that little bit more expensive compared to the supermarkets and other value retailers," he added.

The demise of BHS also brought comparisons with the demise in 2008 of another high-street retail giant in Britain -- Woolworths.

A failure to compete on price with newcomers was what harmed Woolworths, said Barker, a similar mistake to BHS.

"That was the similarity with Woolworths -- they were really known as the entertainment place -- CDs and albums. But towards the end the whole pricing structure fell apart with the emergence of Amazon and others like that. That is where Woolworths tripped up. There wasn't much brand identity towards the end," said Barker.

For Austin Reed, its challenge came mainly from competitors such as Marks & Spencer, which also offer quality but cheaper clothes.

"They are about fine tailoring and that is more of a business metric in terms of being undercut," Tate said, referring to the century-old fashion retailer once favored by Winston Churchill and Elizabeth Taylor.

The demise of BHS and the like is a sign of new times. "If you had looked at these massive organizations 20 years ago -- Woolworths, BHS -- and said these will disappear from the high street, you would have been looked at as though you were mad," Tate noted. Endi