The news today that BHS, the high street retailer, is to go into administration today has marked a turning point in the British high street. The struggling retailer has been loss-making for seven years, and if the retailer collapses, it is expected to be the highest profile retail failure since the breakdown of Woolworths in 2008. Richard Perks, Director of Retail Research, looks at the next steps for the brand…

It looks like the end of the road for BHS. It is quite possible that something could be rescued from what remains and that may depend on the progress made by Retail Acquisitions in developing a new retail proposition, but any deal would probably mean finding a way to walk away from the pension liability. We’ve said all along that the two major problems for the new management team were going to be cash and the time needed to make changes. Both now seem to have run out. For a long time BHS has been an underperformer. Back in the 1970s it lived in the shadow of M&S and struggled to justify a place in the market between the market leader and C&A and Littlewoods at the lower end. The failure of those two in 2000 and 2005 respectively should have opened up a great opportunity for BHS. But the retail vision was lacking and instead we saw the dramatic rise of Primark.

So – where next? The most likely outcome is that the chain will be broken up and sold store by store. Some of the best sites have already gone – notably the Oxford Street store, which has been taken by LPP as a flagship for its Reserved chain to enter the UK. That is the positive side of the failure of BHS. It removes a long term underperformer from the high street and replaces it with a new, more dynamic business. One has to feel sorry for the 11,000 staff who look likely to lose their jobs, but the UK high streets will be a net beneficiary of the disappearance of the BHS because it opens the way for new, better performing stores. If so, then retail employment overall could benefit, but that will not be much consolation to the BHS staff in the immediate future.

Richard Perks is Director of Retail Research at Mintel where he advises clients, writes retail reports and presents webinars. Richard joined Mintel in 1999 and previously headed the Retail team, overseeing the content and strategy of the retail reports. He regularly provides analysis to the global media on retail issues. Before joining Mintel, Richard worked as a City analyst and as a journalist.

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