Strategies for Success - a Retail Turnaround at Bonmarche

A terrific example here of how a return to core, basic retailing skills has enabled fashion retailer Bonmarche to turn around its performance and future.

Back in January 2012 Bonmarche was forced into administration alongside its parent company and fellow retailer Peacocks. At the time it had 400 stores and was weighed under by £240m of debts held by Peacocks.

However, despite the high gearing of Peacocks, there was a more fundamental problem at Bonmarche. It had forgotten who its core customers were - older women. It had fallen out of love with them and chased the potentially more lucrative younger women segments. A classic mistake. High debts (gearing) was a symptom of the business' problems - the underlying cause was poor management.

In her article for the BBC, Emma SImpson describes the role played by the new CEO of Bonmarche - Beth Butterwick. This is another example of how changing the senior management of a struggling, but fundamentally sound business, can lead to much better outcomes for shareholders.

Butterwick identified that the key to success for Bonmarche was to focus solely on older women. Porter would describe this as a strategy of cost focus or differentiation focus (depending on how wide or narrow you define the scope of the UK women's fashion market).

The whole retail offer at Bonmarche has been changed to address the needs and wants of the older, female fashion shopper. Can you spot some examples of this from the article?

The turnaround at Bonmarche has not been easy or painless. The initial phase involved significant retrenchment as the new management team closed loss-making stores and renegotiated store rents (the most significant fixed cost for a fashion retailer).

The demographic changes in the UK seem to favour Bonmarche and the article suggests that the retail brand doesn't currently face much competition. But for how much longer. After all, successful strategies are nearly always copied by competitors eventually...