“Now we have released the shackles from being part of Arcadia Group we feel there is a real opportunity to get the brand back to where it once was, as a great British retailer,” BHS chief executive Darren Topp told Drapers at the chain’s head offices on Wednesday. Here, he sets out his plans to return the department store chain to its former glory.
Our target is a working mum in her mid-40s – she is the powerhouse of the family. We have done lots of market research over the past few years, speaking to our customers and some people who aren’t. We’re finding that no-one does it all for her at the moment in terms of clothing for all the family, as well as homewares, electricals and food.
She wants the stylish looks and colours of the season but interpreted in a way that is appropriate for her. She wants to fit in not stand out, but be recognisably on trend. It’s about stylish clothes, good quality at reasonable prices. She wants cafes and restaurants and to be able to buy food to top up through the week; then there’s things like toiletries, cosmetics and perfume too.
[BHS owner] Retail Acquisitions has bought into the quality of the management and our turnaround plan. They’re not retailers but they do have business experience in other areas. I have been interviewing for a chairman and we’re looking for non-executives to bolster the board, as well as a marketing and creative director.
I am also interviewing for a chief financial officer at the moment and hope to have one appointed in the next few weeks. There is a financial director in place, but this is about strengthening the board now we are not part of a wider group.
Our fashion sales are 50% womenswear and then about an even split between menswear and kidswear, which is quite unusual.
Three-quarters of sales come from fashion and it is our priority to make womenswear even better. Womenswear trading director Sara Bradley joined from M&S as head of buying in October 2013 and we are starting to see the fruits of that now. This year has been our strongest on fashion for a decade. Our customers are women so we have to get womenswear right.
Over half of the kidswear team (of a total of 50) have joined in the last 18 months. Tammy was one of our big brands but it has declined over the years. It originally had a target market of 14 but we know girls of that age are going to Topshop or Primark so we had brought it younger to a target age of 10. Now we’re focused on clothes that are cool for that age but not too cool to offend mum and we are starting to get double digit growth out of it.
We have also identified she wants more accessories so we will trial 400 sq ft concessions with Claire’s Accessories in six stores including Watford, Milton Keynes and Oxford Street. We think there is an opportunity to roll that out to 50-100 stores. Concessions is something we are focusing on. We currently have 137 Wallis and 125 Dorothy Perkins [both Arcadia fascias], for example, which will continue.
We’re talking to other retailers about doing clothing in their stores as well as vice versa, and various other options. We’re open for business and prepared to have discussions with anyone about how to make our offer better for our customer in our stores or online or for new ways for us to reach her.
Food and convenience is a huge opportunity and we used to have a big food business so it builds on our heritage. Following our 2,500 sq ft trials with [food wholesaler] Booker in Staines, Romford and Warrington, which have been a huge success, we will roll out 20 more in summer. The offer is branded food predominantly, fresh, bakery, wine and so on. Basically if you took what would be in a Sainsbury’s Local without the Sainsbury’s branding and put it in a BHS that would be about right. We have the planning permission to do that in 140 stores.
We have the potential to benefit from the change in shopping habits, which is moving away from the big out of town supermarkets, with a food offer in our store locations.
We have also signed a six-year deal with Compass to run all 147 cafes and restaurants in BHS stores. What is crucial for me here is that they will update and revamp them to offer a significantly better experience.
We are also set to open BHS Lighting Shops [concessions] in two Debenhams in Guildford and Oxford of about 1,000 sq ft in summer. What this says is that if we have got a category where we’re strong, this is definitely something we’d consider.
Another example is that we opened a Bureau de Change in our Oxford Street store in November, which has been great, so we’re going to open more.
Members of the operations team, Retail Acquisitions and I have sat down with around 15 credit insurers in the last two months and some have given us some insurance, some we’re still working on. It’s a bit like getting a credit card for the first time – no-one would just give you £30,000 straight away.
What is important is that it is not stopping us placing orders. It is my priority to make sure we get the right stock in stores at the right time to ensure continuity of supply through to autumn.
We continue to pay to the same terms with 60 days and no retrospective discounts so it is business as usual in that sense.
There are absolutely some stores we would like to close or do something different with because we are in some tricky locations. We will continue to close a few but at the start of next year I anticipate we won’t have a significantly different number of stores than we do today.
There are about 30 stores we need to sort out in some way or another but that could mean we cut some in half, do something different. Closure would be the last option. We have closed 25 in the last three years so this is nothing new.
BHS has always been independent [from the Arcadia Group] but some of the admin is going through Arcadia’s Leeds office. It could take 12 months to unravel from Arcadia but some functions have already stopped such as insurance and HR.
The good thing is that we are going to do it in the best way for BHS and all at our own pace. We have various service agreements in place with Arcadia on the basis they were previously.
Our online business is 13% of our own buy and overall it is growing at a significant double-digit growth. We launched on a new platform last year and we have various enhancements planned this year to improve the look and feel of the site, around showing the product better and streamlining processes.
We have a big click-and-collect business already, which accounts for a third of our total online sales. That is something we’re looking to grow too.
Our business overseas is very profitable and made sales of over £100m last year [BHS has 88 international stores, but Topp declined to give profits].
As part of the Arcadia Group, overseas was not something we have focused on enough but that whole Britishness piece plays even better internationally. Our biggest store in the world for BHS is in Qatar - it is less than half the size of Oxford Street but takes more for clothing.
There are plenty of opportunities overseas for us because we are not in most of Eastern Europe, Western Europe, India and Pakistan or Asia. The Middle East and Russia are the biggest markets for us. We are close to signing a deal in both India and Pakistan at the moment.
When we were part of the Arcadia Group, the priority was on Topshop and its overseas growth story. When Tophsop opened on Fifth Avenue in New York last year, we opened in Mongolia on the same day, which was a big deal for us but it went a bit under the radar. Now we have had the shackles of the group taken off we have room to grow.
As we position ourselves as a British retailer, UK sourcing could be something we look to increase. We already get quite a lot of our homeware from the UK so we may look to expand that for fashion going forward – we are definitely open to conversations with more UK suppliers for the obvious reasons that the places like China are getting more expensive and the speed to market.
If we can do it and maintain our value proposition it is definitely something we’d be open to growing.
Like-for-like sales have had single digit growth in the first 35 weeks of the year ending August and that is despite the tough time we and all the other retailers had in September and October.