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What does the fall of BHS mean to us here in New Zealand?

  • Opinion
  • April 27, 2016
  • Ben Goodale
What does the fall of BHS mean to us here in New Zealand?

After weeks of speculation, and what was apparently a successful operation to massively cut costs by negotiating an up to 75 percent rent discount with landlords, British high street retailer, British Home Stores (BHS), has gone into administration, putting the jobs of 11,000 employees and 164 high street stores at risk.

The wires are buzzing with what went wrong. Mary Portas, a well-known UK retail expert, offers some very good opinions here. These can be summarised as the classic case of a retailer failing to keep up with changing times and not being relevant to today’s shopper.

What is interesting is that some of the points Portas makes in her column could well apply to retailers here in New Zealand.

“Through the years, the world has changed in so many different ways; international brands coming in, competition firing up, and the internet has given people access to and knowledge of what is fashionable and where to buy it. There are also social media platforms that can make the small and niche big and powerful. There are new kids on the block looking at innovative ways of connecting their businesses to consumers. There are young entrepreneurs, who are hungry – and creative.”

This will resonate with many NZ retailers and shoppers. BHS at heart was a mid-range department store with nothing particularly special to report. The fact that it was noted as having a good lighting department sums up the problem with the store. That should have been the cherry on the cake. 

NZ retailers, just like BHS, face multiple threats with new and interesting international competitors, online shopping, and a rise of niche and interesting brands in what is a very vibrant retail market.  Being average at most things is likely to lead to a drift of shoppers away to those who are great. And increasingly, fickle Millennials will lead that charge, unfettered by nostalgia about where their mums used to shop. Brands, especially international brands, are bigger here than ever as a consequence of the universality of social media.

As a father of two teenage girls, brands like Sephora, One Teaspoon, Brandy Melville, and of course Victoria’s Secret loom large. Many can be bought online. Others become part of overseas shopping lists for travelling friends or relatives. 

And we’ve seen the retail casualties here. With Dick Smith going and Wild Pair gone, the travails of Whitcoulls a few years ago, and Hugh Wrights before that, the NZ high street knows what it’s like to see brands lose their way. And others across different categories have teetered. 

To survive, let alone flourish, a strong focus on brand, retail experience and innovation are fundamentally important for NZ retailers over the coming years. Uniqueness is ideal. And for many, leveraging the growing world of ‘big data’ and developing a much better understanding of the shopper and their relationship with the retailer. 

Loyalty and reward programmes, or at the very least, strong engagement programmes, will be very powerful tools which when harnessed well, will not only reduce overall marketing costs, but drive up customer visitation and spend.

The good news is that there are fresh and vibrant success stories already on our high streets and in our malls. Both Barkers and Hallensteins have done a great job over the last few years in modernising their brands, ranging, and their retail experience. People want to wear their clothes. 

Supermarkets and other retailers are investing in customer relationship strategies and loyalty programmes to ensure they better understand the behaviour of their shoppers and better anticipate their needs.

Overall, the opportunities for NZ retailers are great – but there are also risks if complacency about the fast-evolving international marketplace are overlooked. BHS, a brand with a long heritage, is just the latest titan of the British high street to fall and probably not the last. 

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