Since the beginning of 2020 I have written several blogs on the sorry state of British retail and the High Street. just just now things got even worse. Much worse.
On November 30, the Arcadia Group, the retail empire run by Sir Philip Green, went into administration, followed a day later by an announcement by Debenhams, another stalwart of British retail, that it would start winding down its 207-years old operations (it had been in administration since April). In a matter of just 24 hours some 25,000 jobs were put at risk.
The pandemic with its forced store closures during the first wave in the spring has contributed its fair share to this dire situation. And with the British cooped up indoors and discovering the joys of online shopping and home deliveries, I suppose it is reasonable to assume that one of the Brits favourite pastime, shopping, will never be quite the same again.
But there is more to this story. in 2006 Sir Philip Green was handed a knighthood for services to the retail industry, having bought British Home Stores (BHS) for £200 million in the year 2000, followed by the acquisition of the Arcadia Group for £840 million a couple of years later. The Arcadia Group’s fashion brand names such as Topshop, Top Man, Dorothy Perkins, and Miss Selfridge, were household names on the British High Street as was British Home Stores. But Sir Philip did not believe in the Internet and online shopping and failed to invest in its increasingly dated stores.
BHS was sold in 2015 for just £1 and by 2016 had a pension deficit of £571 million, while Green and his family collected £586m in dividends, rental payments and interest on loans during their 15-year ownership of the retailer. In 2016, the House of Commons approved a motion asking the Honours Forfeiture Committee to recommend Green’s knighthood be “cancelled and annulled”. One hundred MPs voted in favour of the motion, the first time MPs have proposed someone be stripped of a knighthood. Following a lengthy spat with the British government, Sir Philip Green in 2017 paid £363 million into the BHS pension scheme. And he kept his knighthood.
Debenhams traces its roots back to 1778 and grew to one of the household and well liked names on Britain’s high streets. Private equity investors bought the chain in 2003 and 3 years later made £1.2 billion when they floated the company on the London Stock Exchange. By then Debenhams was saddled with £1 billion of debt. More recently Mike Ashley, another colourful retail tycoon, offered to take the company over (he already owns 30% of it), tabling a rescue offer worth £150 million in April, proposal which was promptly rejected. It seems though, that Ashley is currently talking to Debenhams again, trying to save at least some of the stores and staff – and I suppose the brand name too must be worth something.
BHS, the Arcadia Group and Debenhams were once prominently represented on Britain’s high streets. The closure of their stores is going to leave plenty of boarded-up premises which will struggle to find new tenants. The growing prevalence of the same retail and restaurant chains over the past few decades made town centres up and down the country indistinguishable. That is unlikely to change anytime soon – but the growing number of vacant premises is going to make them look even drearier. Moreover, the pandemic and hence the opportunity to work from home has made people realise that there is no need to live in big cities or near city centres. Bigger houses and gardens outside the usual commuter belts are apparently very much in demand. This may be good news for many towns and villages up and down the U.K., it’s bad news for cities, including London.
The grumpy older man 