The history of BHS:-
- British Home Stores was founded in 1928 by a group of American entrepreneurs. The first store was in Brixton and nothing in the store cost more than a shilling.
- By 1970 the business had expanded and was employing 12,000 staff across 94 stores in the UK.
- In 1986 the store merged with designer Sir Terence Conran's Habitat and Mothercare to form Storehouse Plc, and the "British Home Stores" name was replaced with "BhS", then "Bhs" and eventually "BHS".
- In 2000, retail billionaire Sir Philip Green purchased BHS from Storehouse Plc for £200m.
- In 2015, Sir Philip Green sold the loss-making BHS for £1 to Retail Acquisitions.
- In early 2016, BHS began an insolvency procedure to reduce its rents and transfer its pensions liabilities into the Pension Protection Fund, the government-supported rescue agency.
- On 25th April 2016, BHS was placed into administration.
The history of Austin Reed:-
- Founded by Austin Leonard Reed in 1900, the business was the first menswear retailer to craft ready-to-wear clothes with the same level of expertise as made-to-measure.
- The first Austin Reed branded store was established on Fenchurch Street, with a larger flagship store opening in 1911 at 113 Regent Street.
- Throughout the war, Austin Reed put his suiting expertise to use in making uniforms for admirals, generals, and even (in total secrecy) special agents.
- In 1998, Austin Reed acquired CG (formerly Country Casuals).
- In 2009, Austin Reed acquired heritage brand Viyella.
- In early 2015, Austin Reed entered into a company voluntary arrangement with its creditors.
- On 26th April 2016, Austin Reed was placed into administration.
Both BHS and Austin Reed have suffered from a significant loss of custom in recent years, with BHS losing 800,000 shoppers in the last five years. It posted a loss of £21m in the year to August 2014 and Austin Reed reported a loss of £1.29m in the year to January 2014.
It has been reported that BHS has liabilities of approximately £1.3bn, including a £571m pension deficit.
Both of these retailers have previously been regarded as long-established and trusted brands by their customers and suppliers.
So where has it gone wrong?
Is it simply that they have lost their way and have not kept up to date with market trends. If you look at BHS, it has suffered years of underinvestment and its clothing range is stuck in the middle, it is neither cheap nor expensive. If you want to purchase something more luxurious, you are more likely to shop in designer shops or department stores such as John Lewis or M&S and if you are looking for value for money, you are more likely to shop in likes of Primark or H&M. The value/budget stores cater for all age groups and the customer isn’t necessary looking to retain an item of clothing for years, all they want is something that is reasonably priced that they can wear for the current season. Stores such as Primark and H&M are ideal for this type of shopper.
The impact of administration
The administration of both companies not only effects the owners of the business, it also impacts on the employees, customers, suppliers, landlords and stakeholders, all of which can be left high and dry if a purchaser cannot be found for the business.
Both the administrators for BHS and Austin Reed will market all or parts of the businesses for sale so let us hope that many jobs can be saved and also that the brand names are around for many years to come.