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BHS Marketing High Street

The demise of BHS and what high street retail brands need to do to avoid the same fate

By David Blair, chief executive

June 2, 2016 | 5 min read

This week sees the downfall of BHS, a long-standing member of the British High Street. The 88 year-old department store, along with fashion brand Austin Reed, called in the administrators after what is widely acknowledged to be a long period of decline. Today, BHS confirmed it is to close.

Controversy currently surrounds BHS because of its enormous pensions deficit, but the problems which plagued both retailers are more universal. The fact is that both chains, like Woolworths before them, were simply unable to keep pace with changing audience behaviour and new entrants to the market. As a result, they missed a series of opportunities to capitalise on change instead of falling victim to it.

Being out of touch is a common accusation of brands who send a tone deaf tweet or misjudge a sponsorship deal, but the problem at the heart of BHS and Austin Reed’s decline is systemic to the modern retail industry. The past few years have seen the ascent of a very different market which caters to fast lifestyles and choosy customers.

Not all retailers have acted fast enough to catch on, but this week’s news should give them pause: what is the strategy for sustainable growth in a rapidly shifting market?

A good place to start is to question the received wisdom that drives traditional retail:

Don’t count on loyalty, earn gratitude

The modus operandi for retailers was always to maintain their loyal customer-base, but as the ‘old guard’ might agree, the idea of loyalty is dead and buried. On average, over half of retail custom comes from people who have not shopped with a brand in the last 2 years. While brands have a chance at holding onto some of these customers, half won’t come back again.

So retailers need to continually earn the gratitude of anyone they are lucky enough to have as a customer and search for new, effective ways to serve shoppers while they are in touch.

Stop pushing products, start creating rich experiences

The route to customer gratitude is quality service, but that word now means far more than just being on hand to check stock or bag items at the till. In the 1950s 70 per cent of what people bought were products like peanut butter and cars, and 30 per cent were services like meals out and holidays. In today’s ‘experience economy’ 60 per cent of disposable income is spent on services.

The key to unlocking that customer gratitude is to decide what experience a particular store can give to shoppers. Endless racks of products can be seen online. Customers are looking to have fun, feel some theatre and generally be wowed when they step in-store.

Don’t chase spend, increase time spent

Great shops today are about more than the final transaction. They blend retail with hospitality and attractions. Levi’s and Burberry host live music, cafes are popping up in all kinds of stores and toy retailers are starting to resemble inner-city theme parks.

Intu, the shopping centre chain, found that for every 1 per cent increase in time spent at a store, there was a 1.3 per cent increase in spend. The bottom line is that happier customers spend longer at stores and spend more money.

Quick is better than perfect

‘Old retail’ strategy was to create the perfect store and then copy and paste it everywhere.

The best-loved retailers today evolve their store designs continuously. This is the only way to ensure that your brand is learning and evolving its offering for customers. When a store launched in winter looks and feels different than a store launched in the summer, you know that brand has put thought into its experience, and put the customer first.

When shoppers are seeing change in internet-time across all other areas of their lives, retailers need to understand that being fast and novel trumps all other goals; agility will keep them fighting fit for whatever the future holds.

David Blair is chief executive (EMEIA) at Fitch

BHS Marketing High Street

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