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Lessons we have learned from the collapse of BHS

This week marks a year since BHS collapsed into administration, in what was the beginning of the end for the 88-year-old high street chain.

Duff & Phelps were appointed as administrators on 25 April 2016 after attempts to find a buyer failed. There followed a summer of scandal and intrigue, and a high-profile parliamentary inquiry aimed to unpick what had happened and make sure lessons were learned.

The gaping pension deficit was settled in February, when former owner and Arcadia boss Sir Philip Green made a voluntary contribution of £363m. However, it thrust the issue of black holes in retailers’ pension schemes into the spotlight. Days later Arcadia doubled payments into its pensions fund to help plug a deficit of £189.6m.

The pensions debacle has clearly shaken up industry leaders. Just yesterday, Debenhams chief executive Sergio Bucher was keen to make the point that its pension fund was in surplus.

Meanwhile, many ex-BHS employees are still looking for jobs in an increasingly competitive retail environment. Last week, Lancaster-based JWK Solicitors secured a £1m payout for a group of former BHS head office workers who were seeking compensation for the company’s failure to deal with their redundancies properly.

Empty stores

By last August, the final tranche of BHS stores had pulled down their shutters for the last time. A year on, nearly two-thirds still stand empty.

Retailers such as Primark, Sports Direct and Next have been the most active in terms of picking up some of the units, but some are proving harder to let due to their size and/or location, as some are in less-than-prime retail areas.

Two of the most notable new entrants are Polish retailer Reserved, which is readying its UK debut in part of the former BHS flagship on London’s Oxford Street in autumn this year, and Edinburgh Woollen Mill (EWM) Group, which is preparing to launch a new department store concept in the former BHS unit in Carmarthen, South Wales, later this month.

Arcadia’s out-of-town multi-fascia concept Outfit is also poised to open in the former BHS store in the centre of Newcastle-upon-Tyne, offering Topman, Topshop, Miss Selfridge, Burton, Wallis and Dorothy Perkins all under one roof.

A strategy shift

BHS faced myriad challenges, many of which were tied up with its problematic sale to a previously unknown party with no retail experience. However, even before that, many critics accused the chain’s leadership of failing to innovate and keep up with the competition.

In the year since BHS collapsed, many of its major department store rivals have unveiled new strategies that aim to position them ahead of the game before it’s too late.

As the retail environment looks set to get tougher with the continued pressures of impending Brexit, the living wage, business rates and increasing competition, the late BHS serves as a painful reminder of the dangers of  sitting still as the world around you changes.

 

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