It feels like not a week has gone by this year without a news story on BHS and Sports Direct – and this week is no different.
Over at Sports Direct, the infamous Mike Ashley is now chief executive after Dave Forsey resigned last week.
Somebody’s head had to roll after the negative publicity and investigation into working practices at the Shirebrook warehouse. Ashley made it clear at Sports Direct’s annual general meeting earlier this month that its chairman, Keith Hellawell, had the board’s full support. Meanwhile, a review of Sports Direct’s employment practices published in early September concluded that Forsey had ”failed to inform the board in a timely or effective manner” of shortcomings at the business. In the end, he had little choice but to depart.
As deputy executive chairman, Ashley wielded some influence over Sports Direct’s operations. As CEO he is ultimately responsible for all management decisions. He is a divisive character and his appointment has been met with mixed reactions – but in my view, it is a good thing that he will now be fully held to account for the running of Sports Direct.
At the annual general meeting, Ashley apologised repeatedly for the firm’s tangled web of problems. With the whole industry (not forgetting the shareholders) watching him closely, the pressure is on to show he can turn his words into actions.
BHS is facing its own fresh challenges. As we reported on drapersonline.com, BHS will relaunch online under the ownership of Qatar-based firm Al Mana on Thursday. An anonymous commenter on the story suggested that the traditional BHS customer does not shop online. Indeed, the new BHS chiefs agree and have shifted their target age downwards, aiming at a baseline of 35-year-olds.
The BHS brand still has a place in many people’s hearts, as demonstrated by the strong support for the “Save BHS” campaign. But it will be a huge challenge to turn around a business that has been on a downward spiral for so many years.
BHS has said product will revolve around bestsellers and the fashion will be more “edited” than it was before. Is that enough to revitalise it? After months of negative publicity surrounding its collapse – including photos of bargain hunters ransacking its stores before they closed – BHS will have to work on reassuring customers that it is a trustworthy and reliable place to shop.
It will need a much clearer focus on its product range. Targeting a younger customer base will bring the added challenge of attracting new customers to an old-school brand. Customer sentiment is no doubt there, but the question is whether this will result in sales.