Filling the gap when department stores go bust

It took less than a month to find a new use for the palatial sandstone building in the heart of Edinburgh that was once a jewel of Sir Philip Green’s retail empire.

The Scottish capital was one of more than 100 British towns and cities to see a large gap open up in its high street when BHS collapsed last year. For some provincial shopping streets, the clothing and homeware outlet had been their biggest draw.

The chain’s demise has forced landlords to be creative in filling those gaps, often by embracing gym operators and pound shops as well as other retailers, in the hope they can seed life in the darkened stores.

With other department stores looking vulnerable, having survived a cyclical downturn only to be plunged into a new battle against obsolescence, what has happened to BHS’s stores might prove instructive for the future.

Scottish Home Stores on Princes Street in Edinburgh © Alamy

On Edinburgh’s bustling Princes Street, local entrepreneurs reopened the former BHS as “Scottish Home Stores”, replacing fading brands such as Dorothy Perkins with a distinctly Caledonian take on bygone fashions.

“We started off doing excess kilts and cashmere tweed,” says one of the traders involved, who requested anonymity because he did not want his name linked to the shortlived venture. Eventually he ordered consignments of Halloween costumes, toys, and anything he could sell: “It took a lot of stock to fill all three storeys.”

Such makeshift stores can keep streets lively while developers fill the holes created by a major retail failure. BHS had fewer branches than the biggest retail casualties of the recession, but property experts say the void it left behind is still proving hard to plug. 

Unlike Comet, the failed electricals retailer whose 236 outlets were mainly located in out-of-town retail parks, BHS operated from town centre stores that motorists usually bypass on suburban shopping trips.

And its vast emporiums, often built without windows and spread across multiple floors, are less adaptable than the 800 former Woolworths sites — many of which are now pound shops, coffee shops or discount clothing stores.

While new tenants have been found for at least two-fifths of the 164 former BHS outlets, according to a survey by Retail Week, only three of them are expected to remain as department stores. 

In prosperous areas such as Newcastle and Brighton, brands including Next and Zara are moving in. Discount clothing fascia Primark has taken the biggest compliment of stores, with 13 locations from Carlisle to Llandudno. 

Many of the new stores only occupy a fraction of the floor space occupied by the old BHS, but some have been carved up more efficiently; in Taunton, the street level store will be taken over by a pound shop, while upper floors are taken over by a 24 hour gym. 

The Ealing outlet of BHS is to be demolished and replaced with an apartment block © Anna Gordon

Seven stores are being transformed into cinemas or hotels, or knocked down altogether to make way for a combination of modern retailing layouts. The Ealing outlet will be razed to make way for 136 apartments to be built by Thames Valley Housing Association — a deal that proved lucrative for Sir Philip’s stepson Brett Palos, who bought the property shortly before Dominic Chappell’s disastrous £1 acquisition of BHS.

Even the more limited redevelopment involved in freshening up a shopping space can involve drastic building work. In Hammerson’s Highcross shopping centre in Leicester, builders knocked through an upper wall of a former House of Fraser to expand a multi storey car park into what was once a brightly lit selling floor. They stripped the basement out, too, to make way for an indoor golf course. 

Such extensive revamps are economic only in vibrant shopping centres used by affluent customers. Elsewhere, executives are finding thriftier ways to extract value from ageing buildings.

The former BHS site in Watford © Anna Gordon

“If I didn’t believe in the future of department stores and bricks and mortar retail, I probably wouldn’t have left Amazon to come and work for Debenhams,” says Sergio Bucher, who became chief executive of the 176-strong chain last year.

He plans to refurbish some stores and alter the size of others, while using better customer data to run space more efficiently. “In the past, if we had two stores of the same size, we would send them the same clothes,” Mr Bucher says. “That’s not very smart if one is in the north where it’s cold, and one is in the south where it’s warm.”

Retail analysts say there is mileage in such initiatives, even if most believe that department stores will be the most vulnerable in the next consumer downturn.

Heyday: a branch of British Home Stores in Kensington on the day it opened in 1978 © Getty

Among the cautious voices is Steve Spray, who began considering the future of BHS’s Edinburgh branch months before the chain’s downfall. Six months after Scottish Home Stores opened its temporary store, builders arrived to start work on a 130 bed hotel and rooftop restaurant, which is due to open in 2019.

“I suspect every landlord who has one of those large stores on what they might call a watchlist all have contingency plans, in exactly the same way that we had for BHS,” he says. “A lot of the BHS stores are really challenging, because of the places they’re in, and because they’re not as well designed as ours.”

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