‘Death by 1,000 clicks’: BHS nears collapse

Decline and fall: The Centre for Retail Research predicts 316,000 job losses between 2013-2018.

‘Dated.’ ‘Old-fashioned.’ ‘A staple of British history.’ BHS department stores face bankruptcy: more victims of the internet, say commentators. Can shops survive the digital revolution?

‘I’ve worked here 30-odd years,’ said a BHS shop assistant yesterday morning. ‘You must be devastated,’ a reporter replied. ‘Yes, really, very. Yes.’

The woman is one of BHS’s 11,000 employees whose future was thrown into question yesterday as the department store chain filed for administration — meaning if a buyer cannot be found to manage its £1.3 billion debts, the company’s 164 stores could quickly disappear from the high street for good.

Pressured on all sides by the growth of online shopping and the popularity of more specialised brands, BHS is not the only struggling department store. Debenhams lost its chief executive last year. Marks and Spencer cannot sell its clothes. Even John Lewis’s sales are ‘not quite as stellar’ as usual. And in the USA, the world-famous Macy’s is beginning to feel the strain.

Some have predicted that shops — like DVDs, books, and classified ads — will be slowly swallowed up by the internet. It is a process that business advisers call ‘disruptive innovation’: sometimes a new technology comes along and the old ways disappear. Customers may love Netflix and Uber, but it means saying goodbye to box sets and black cabs. That is how technology works: always moving forward, nothing lasting forever.

But is that really true? In 2009, the writer and scholar Umberto Eco said that ‘the book is like the wheel. Once invented, it cannot be bettered.’

It was not long after Amazon’s Kindle had appeared, and cheap ebooks caused panic in the book world. But lately publishers have noticed a welcome trend: physical book sales are climbing. ‘The effect of the digital market has been to make people think harder about analogue,’ said one CEO.

Undeniably, there are some casualties in the face of new technology: cassette players, VHS stores, memorising someone’s phone number. But there are survivors that we hold on to: books, vinyl records, cinemas — even, recently, Polaroid cameras.

Will shops be one of them?

Retail therapy

Shops are basically becoming pointless, say some: irritating, and soon to be relegated to ancient history — a quaint reminder of a bygone era. Nothing can rival the choice and convenience of online shopping. Why mourn the arrival of a world where you can compare prices, chat to friends and stream your favourite movies without leaving your bedroom?

But consider this, say others: the online giant Amazon is now investing in new ‘bricks-and-mortar’ stores. Their research is showing that shopping trips are a social, shared experience. And others are as devoted to shops as they are books, and for a similar reason: the sheer pleasure of seeing and holding something real in our hands.

You Decide

  1. Would you miss high street shops if they were gone?
  2. Imagine you have been put in charge of saving BHS. How would you do it?

Activities

  1. Design your ideal high street. Which stores would you most want to visit in real life? What features would you like on the street? How should the shopping experience feel?
  2. In groups, draft a business plan for a new physical shop you would like to see.

Some People Say...

“The world has reached peak stuff — shopping is a habit we all need to break.”

What do you think?

Q & A

I never shop at BHS. Why should I miss it?
Perhaps you won’t — but even if you are indifferent to the company itself, it is worth thinking about the changes in technology and behaviour which have led to its demise — and the future they imply. Is that a future you want? Why? Why not?
Where did BHS go wrong?
It has been in trouble for a while. It never embraced online shopping like its competitors, and its clothes are not particularly fashionable or cheap — so it loses customers on both counts. There is also the problem of its debts, including the pension scheme with a deficit of £571m.
What will happen next?
The administrators will try to finance the company’s debts, and they have to decide: can they turn the business around, or is it better to shut the stores and sell the property?

Word Watch

BHS
Originally British Home Stores, the company has been around for 88 years.
Administration
A process in which a third party takes over a business’s management, on behalf of its creditors (the people it owes money). It is the final step before liquidation, when if the company cannot be sold as a going concern its assets are sold.
Netflix
The streaming service has radically changed the TV and film industry, by offering a cheap subscription service not relying on adverts or sales.
Uber
The mobile taxi app using technology to disrupt local taxi industries in the UK and USA. In Manhattan, yellow cab owners are suing New York for allowing Uber drivers to ‘eviscerate’ their business.
Umberto Eco
Italian novelist and philosopher, who died in February, best known for his historical mystery The Name of the Rose.
Climbing
Book sales rose by 6.7% in 2014 according to the Office of National Statistics. Meanwhile, Waterstones says its Kindle sales are ‘disappearing’.
Polaroid
The iconic instant camera is enjoying a return, despite the huge rise of digital photography and smartphone cameras.

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