On BHS

Be honest. When did you last buy anything at BHS, or British Homes Stores, or whatever it is called these days?

If you want bland, middle market, fashion, go to Marks & Spencer. For something a bit racier, and probably cheaper, TK Maxx. Socks and knickers, your local grocery superstore, as you do the Saturday shopping. One sock is enough like another. Alternatively, for something fashionable, the usual expensive boutiques, probably conveniently located in a clump in your local high street department store. What, of the above, would you buy at BhS?

Yet an obscure bunch of investors have agreed to take BHS off the hands of Sir Philip Green, the at times irascible retail entrepreneur who has finally tired of trying to turn  the loss-making chain around. Two pointers to the future of BhS: I have known Green for two decades or more, and he is, ahem, not exactly crippled with self-doubt or one to give up on a challenge. If he can’t do it…

Second, Harriet Green, someone else I know from her time turning around Thomas Cook, has reportedly declined the chance to get involved. Thos Cook was on its deathbed when she took over; if even she doesn’t think she can rescue BHS…

Still, hope springs eternal, especially among the sort of private equity princelings who tend to get involved in such last ditch rescues and are constitutionally unable to accept that any task is beyond their innate genius. The shrinking in the high street since the start of the century has failed to keep pace with the growth in the amount of stuff we buy on line, which suggests there may be more pain, closures and bankruptcies to come among established retailers.

Some chains have no rational reason to occupy the space – remember the awful death throes of Woolworths, another chain whose entire raison d’etre evaporated some time around 1996, a decade or so before it finally closed its doors. Remember Habitat, still hanging on in there somewhere? We furnished our first home from Habitat. Mind you, it was 1985.

About the only sectors of the high street that are growing are the pound stores, where you can get a random selection of goods cheap if you are prepared to queue, and the charity shops. I give BhS three years.

Advertisement

On Retail (Again)

Figures for December from the British Retail Consortium suggest something I had already suspected: it was not a good Christmas for the high street. From my experience, the West End was packed with tourists shopping. There were queues at the big out of town retail parks.

But the high street was relatively empty. There were no queues to endure in each of the three shopping trips I made locally, and few shoppers frantically throwing their money around. It looked like normal trading.

This means that some of our best loved chains will come under further pressure in the New Year, and some well known names may disappear. There is the assumption that this is down to economic hard times, and the growth of the Internet.

It is worth looking at this a little more carefully, though. Online shopping really began at the start of the last decade. But the amount of shopping space, including at the big supermarkets, continued to grow through that decade.

One would have thought that, as the Internet grew over that period to account for ten per cent or more of sales – it now stands at as much as a fifth, by some measures – some of that shopping space would have contracted. It didn’t.

The answer, I suspect, is that too many chains were kept open, often by their banks, well beyond when they should normally have contracted or even gone out of business entirely. This was because no one thought the long, debt-based boom would ever end. The long death throes of Woolworths, a chain that lost its reason to exist some time around 2000, would seem to bear this out. The eventual reckoning for retail, once it finally came, was therefore worse than it needed to be.

We hear a lot from economists about so-called “zombie firms” kept artificially alive by low interest rates. And zombie retailers, too?