In the Slough branch of BHS, the staff wear jumpers under their uniforms in winter: the heating in the store has not worked for years. It is a small detail, but one that explains a lot about the chain’s predicament: years of underinvestment that weakened the 88-year-old retailer’s grip on the high street.
The Slough store is at the wrong end of a tired high street, a couple of doors down from a pub called Wernham Hoggs (after David Brent’s workplace in The Office), and trapped in a Poundland pincer movement after the takeover of 99p Stores left the discount chain with two shops almost side by side.
On Thursday morning, the branch is nevertheless bustling as predatory customers flick through the clothing rails, sniffing out the hefty markdowns that signal the beginning of the end.
“We feel let down,” says one long-serving staff member who, despite the uncertainty, is toiling with dignity on the shop floor, intermittently dealing with blunt requests to do the maths involved in the day’s 30% off “spectacular”.
“Philip Green has had his money and now he doesn’t care. All of us live locally and have relied on this job.”
It is a sad irony, she adds, that after years of “shit wages”, April was the first month their pay packets had been boosted by the new “national living wage”. It could be the last month too, as the BHS’s administrators attempt to broker a rescue deal.
To say it has been a bruising week for Sir Philip Green would be an understatement. Although he was not BHS’s owner at the time of its collapse – having offloaded it in 2015 for £1 to a group of little-known investors – he is being widely blamed for the £571m deficit in its pension fund.
That fund is now being assessed to enter the Pension Protection Fund, and the gaping hole in its assets is being compared to the £580m in dividends, rental payments and interest on loans paid to Green’s family and other shareholders during his 15-year ownership.
The collapse of BHS, which employs 11,000 people, is the biggest failure to hit the high street since the demise of Woolworths in 2008. The need to bail out the pension fund means thousands of workers face a cut in pension entitlements – a situation that has encouraged a former member of its management team, Lin Macmillan, to mount a campaign. She is demanding Green do the right thing, and urging colleagues to contact her at selltheyachtspaythepensions@gmail.com.
“I worked at BHS during the 80s when it was thriving,” says Macmillan, who bemoans the lack of investment in its stores and brand. “It has stayed the same, and you can’t stay the same in retailing.”
The loss-making retailer had annual sales of £668m at the last count but under Green it bled market share in clothing to nimbler rivals such as Primark and the supermarkets. Share nearly halved to 1.4% during his ownership.
“I buy my swimwear and my boots there,” says Tina Hill, out shopping with her mother in Slough. “BHS caters for bigger people. Its OK if you are a size 10 to shop at Primark, but if you have got big hips and big tits you’ve got no chance.”
Hill says BHS’s clothing had “gone downhill,” pointing to rivals such as Bonmarché, which has signed up designer David Emanuel, best known for having designed the wedding dress worn by Diana, Princess of Wales, to boost its fashion credentials.
Some shoppers enthuse about BHS’s homewares, particularly its lighting, as well as the keen sale prices, but the stark drop in market share reflects that even its core, older audience had become alienated. Its lack of fashionability was compounded by a depressed store estate that, beyond its flagships, had fallen behind rivals. In Slough, for example, shoppers last week were still being greeted with a tired display of marked-down Easter eggs.
“BHS would have performed better if it had had more investment,” says Richard Hyman, the independent retail expert. BHS, he says is one of four original variety-store chains – a list that at one time included Littlewoods and Woolworths as well as the only survivor of the group, Marks & Spencer. “The variety store was conceived as the poor man’s department store,” he explains.
In the latter years of Green’s ownership, he focused financial resources on its more successful sister group Arcadia, the fashion giant behind eight brands including Topshop, Miss Selfridge and Evans. In an effort to boost sales, Green parachuted a handful of Arcadia brands into BHS, with large Wallis and Dorothy Perkins departments dominating the Slough store’s fashion offer. Two years ago it also started opening food halls.
But BHS was loss-making in the eight years leading up to its collapse as it struggled to stay relevant on an increasingly competitive high street. Green’s camp say his family shouldered losses of £255m to keep it going, and point to a dowry, of £74m in cash and £100m of property, handed to the new owners.
Hyman points to the rise of Primark. “Over the period BHS has declined, Primark has added around £2bn to its sales line. Green demonstrably should have sold BHS sooner, when it might have attracted more people to take it on.”
The vultures are now circling, and administrators Duff & Phelps are claiming to have 50 expressions of interest in the business, although only 10 are thought to be serious. BHS’s 164 stores are a mixed bag of leaseholds and freeholds, and it is unlikely that any buyer would want to take on the whole motley collection.
Preston-based property millionaire Yousuf Bhailok, a former general secretary of the Muslim Council of Britain, has put his hat in the ring, while Allan Leighton, the retail turnaround specialist who currently chairs the Co-op, is also working on a bid. The serial chairman, who has also sat in the hot seat at Royal Mail, is famous for turning around Asda with Archie Norman in the early 1990s.
Dominic Chappell, the twice-bankrupt former racing driver who bought BHS from Green, claims he too is working on a bid. However, this has been greeted with derision – not least because he and Green could be called to give evidence before MPs investigating the sale of BHS, including whether the directors of Green’s Arcadia and Chappell’s Retail Acquisitions acted as well as they could to fulfil their statutory duties.
It is unclear how long the administrators can keep BHS’s stores open, but it is expected to be long enough to achieve a sale. One industry insider suggested it would only be possible for another retailer to take on BHS, as its supply chain has been severed. Mike Ashley’s Sports Direct, Edinburgh Woollen Mill owner Philip Day and South African billionaire Christo Wiese, who is backing the UK launch of discount chain Pep & Co, are among those linked to a deal.
“If this store went, there would be nothing here [in Slough],” says Hill. “BHS is for the working person, you get good quality, good gear. When BHS has a sale, they have a sale.” The biggest sale yet could be just around the corner.
