As soon as BHS announced it had agreed a company voluntary arrangement in March, many savvy landlords immediately put in motion the process of removing the ailing retailer from its properties and replacing them with more vibrant retail brands.
Now that the retail chain has slumped into administration that trend will, of course, accelerate and while it will be of no consolation to BHS staff or debtors, this will be something of a silver lining for many retail pitches across the UK.
The administration of BHS is understandably being compared to the collapse of Woolworths: both had a large network of substantial stores across the UK and both had a retail offer which many felt had run out of steam some time ago. BHS like Woolworths did not change quickly enough to keep up with the changes in the retail market and many of the BHS stores look tired and dated. Even the flagship store on London’s Oxford Street has been struggling for many years.
In what now looks like a real ‘sign of the times’ deal, I advised on an agreement for lease which secured the exit of BHS from Fosse Park, Leicester and their replacement by Primark. It was a big decision for the landlord but as the brand new Primark store takes shape it looks like being the right one.
When Woolworths went into administration in 2008, I remember that they had only recently opened a big shopping centre anchor store in Loughborough. While this looked like a major reverse for the landlord, they were actually able to re-let the store to Tesco in a deal which improved the rental income, created more footfall and enabled a rebalancing of the fashion offering at the centre.
Three years after Woolworths failed, 87% of their stores had been relet or found alternative uses. That process was carried while the recession was still in full spate so it will be interesting to see how quickly the BHS stores find new occupiers.
Of course, administration does constitute a major challenge to employees, landlords and suppliers but it can also bring regeneration to shopping pitches which were being hindered by a failing brand.
Now is the time for landlords to look at all of their BHS – and Austin Reed - stores with positive eyes and consider how getting these units back may deliver long-term benefits.