As Arcadia boss Philip Green looks for potential buyers for BHS, can the fashion retailer be reinvigorated by new leadership?
In a year that many believe will put mergers and acquisitions firmly on the agenda, it is perhaps fitting that one of the industry’s great deal-makers, Arcadia boss Sir Philip Green, has fired the starting gun.
The tycoon has been speculatively linked in the past to suggestions he would be open to disposing of the troubled BHS business.
However, an official ‘for sale’ sign now seems to have been hung above the door, raising the questions of how the brand might best work on the UK high street, who might own it and why now is the right time for a deal.
And the golden touch of the great man has not been enough to restore its fortunes so far. Competition from a new range of aggressive value retailers such as Primark has chipped relentlessly away at BHS’s position in the market, exacerbating the challenge posed by the rise of online shopping.
While once the brand stood for value clothing and homewares in the minds of shoppers, others have stolen a march, leaving the brand without a clearly differentiated proposition.
Yet, against this background, Sir Philip said this week he had received a number of approaches for BHS.
He has always been a defiant defender of BHS’s prospects, and Arcadia’s most recent results showed a 3.6% jump in like-for-like sales.
Additionally, BHS has offloaded a number of unprofitable stores in recent years and added food licences to 150 properties, which will pique interest in its possibilities.
And the success of value rivals, alongside news that former Asda boss Andy Bond is to lead the launch of a new high street value fashion specialist in the UK, may convince investors there is opportunity in BHS yet.
The question they will ask is whether the BHS brand has sufficient mileage to be reinvigorated. It would be a challenge, but it’s happened before.
The state of retail
This week we launched Retail 2015, our annual state of the nation report with partner Kurt Salmon on the prospects of the industry for the next 12 months.
By combining interviews with chief executives that represent more than £40bn of revenues a year, as well as the views of over 1,000 consumers, we have taken the pulse of British retail.
Views on economic prospects for retail remain cautiously optimistic, as for the past two years. However, retail chiefs have also reflected on the pace of change in their businesses, driven by consumer behaviour and the leaps being made in technology.
Retail can be proud of what it has achieved in the last few years in dealing with such changes, but those we have seen thus far will seem superficial by comparison to the transformation the industry will undergo in the next two years as it restructures to meet the needs of the future.
- Chris Brook-Carter, Editor-in-chief