BHS and the Demonization debate

April 28, 2016

BHS

 

BHS, not unlike Boots, is a British icon of the High Street.  Its decline makes it open season for demonization of its current owners and more significantly for Sir Philip Green, who sold it for £1 a year ago

A year ago, Philip Green signalled a tough time ahead for BHS with his peppercorn sale of the retail stores, throwing in a modest sweetener towards its huge pension liabilities. The new owners were either a brilliantly visionary group of entrepreneurs, or a bunch of body snatchers. As BHS heads for administration, the second looks the more realistic.

Its new leader, Dominic Chappell, was described by The Mirror as an ex-racing car driver and former bankrupt. In a last desperate effort to rescue the company, Mr Chappell was reported to have moved £1.5 million from the company in an imaginative but ill-fated manoeuvre more suited to the racing track. He has since paid most of it back.

As the Mirror explained:

Representatives confirmed the news today [April 25th 2016] after talks with Sports Direct – owned by Newcastle United billionaire Mike Ashley – to sell some of its 164 stores collapsed at the weekend. A formal announcement is expected at around noon.

The collapse of BHS would be the biggest retail failure since Woolworths folded in 2008 with the loss of almost 30,000 jobs. It is understood any buyer would only step forward if it did not have to take on the £571m pension deficit.

The Financial Times

The Financial Times offered a rather half-hearted defence of Philip Green. Its article was headed The demonization of Green, arguing this was a result of the prerences of the tabloid press. Then it got down criticisms of the commercial judgement of the life style and financial practices of the tycoon which could be seen as something of a demonization of itself.

These included a charge of ‘Pensions dumping … as the entrepreneur was taking delivery of his third superyacht to his Monaco bolt hole’.

The Daily Mail

The Daily Mail, one of those tabloid media, did indeed give Philip Green a thumping, although the ‘demonization’ was as much it that newspaper’s style than its substance. Its headline ran Can the man who milked the millions from BHS really be allowed to keep his knighthood?

The Mail added to a chorus of demands that Sir Philip be banished to the naughty chair, be relieved of substantial amounts of Moola, and be stripped of his knighthood.

The main points were covered in more robust terms than was found in the Fnancial Times, although the Mail actually cited the FT as for one of its sources for ‘a staggering billion or so moved from BHS into the family coffers under the Green machine’.

The Guardian

The Guardian having done a right royal anti-royal piece on the Queen’s knees-up, last week kept the top on the vitriol bottle.  The article was pretty much like the Mail’s, with perhaps more distain for Green’s life style and the milking of BHS assets.

Mary Portas

Mary Portas was more dismissive. In a radio interview [Monday 25th April 2016] she talked of the lack of vision by BHS over the years, and its failure to grasp a future more like pound savers and the need for more visionary leaders. [Note for business students: can you see some tiny flaw in the reasoning of the person charged by the Government with reviving our High Street?].

To be fair, anyone can get a bit carried away in a radio interview.

In a piece for the Guardian, the Queen of the High Street explains under the headline how I would have saved BHS

If I had been at British Home Stores I would have looked at today’s market place and created a brand that is relevant for today’s shopper.

I would have gone totally after the value market, but made it functional and cool.

I would have started with where it was good – the lighting. Then I would have extended that to become a modern British lifestyle retailer at a great price.

Nice move, Mary

So that’s what Philip Green missed. Fixing the lighting. Mary avoided mentioning him by name. Probably best.  He has been known to sort out opposition in a not particularly functional or cool sort of way.

To be continued


Does Simon Cowell lack the X Factor? Seven Questions for Students of Leadership

December 29, 2011

Simon Cowell

Here’s a test which may be fun to try out on your under-graduate business students. Even if the challenge is too easy for discerning subscribers to Leaders We Deserve, you may like to pose it to a family member or friend

At very least it could add to one of those discussions around the TV beginning ‘That Simon Cowell might think he’s smart but…’

A Management Today article

Management Today helped themselves to this piece of marketing from a news agency.

IFF Research, which has sent the following over to us. According to the findings of its SME [Small Medium enterprize] Omnibus, just 5% of small business owners would choose Simon Cowell to be a consultant to their business.

Beard enthusiast Richard Branson raised few eyebrows by topping the list of the most desirable celebrity business consultant, with 34% opting for him – while 30% said they’d prefer the no-nonsense ministrations of professional finger pointer Lord Alan Sugar. Below them came Mary ‘Queen of Shops’ Portas, whose recent attempts to save the high street don’t seem to have garnered much love from business owners (she only got 5% of the vote), and Karren Brady who with another 5% of votes, is clearly getting into her role as Sugar’s sidekick on the Apprentice. Bringing up the rear were Cowell, who obviously doesn’t have the X Factor when it comes to popularity contests, and ‘city superwoman’ Nicola Horlick, with just 1%.

What’s slightly depressing is that just 20% of business owners picked women – even though Brady (for example) became the youngest-ever managing director of a UK plc at the age of just 23, while, having juggled six children and the running of an investment fund, Horlick could certainly show Branson a thing or two when it comes to multi-tasking. Sugar, on the other hand, has managed to build a reputation on crushing the hopes of young business wannabes. Which suggests, as IFF MD Mark Speed points out, that ‘there is more to be done if women are to be on an equal footing with men’.

The Leadership Challenge

The piece got me thinking about why the survey was carried out, and whether the results have much credibility. The best use for it I could think of was a way of encouraging ‘map-testing’ for students. So here’s my undergraduate test based on the news item.

Test the credibility of the survey along the following lines:

[1] What choices do you think were offered to the respondents to the survey?
[2] What proportion of respondents do you think were women?
[3] How might the answer to [2] influence the survey results?
[4] What proportions of respondents might have heard of each of the various candidates evaluated?
[5] How might the answer to [4] influence the survey results?
[6] What might explain Richard Branson’s popularity?
[7] Why might IFF Research have carried out this survey


Reclaiming the town centre: The Mary Portas report and her magnets for change

December 14, 2011

Mary Porter presents her government-commissioned report to deal with the decline of inner city retailing. Has the Queen of Shops made a serious contribution to addressing the problems? And is there another story of her undeclared business interests?

Mary Porter has become a celebrity in the UK, thanks to her TV role as a trouble-shooter, specialising in fixing retailing businesses. As a late adaptor of such things myself, I had learned of her through my Business students and colleagues. She seems to have become something of a role-model, and worth scrutiny for her approaches dealing with leadership dilemmas

A confident message

On the day her report came out [Dec 13th 2011] she did the rounds of the media. I heard her on Radio 5 live. Her performance was impressive and confident. Her message clear. The traditional high street at risk from the giant retailers and the convenience of out-of-centre shopping.

An academic called in to comment would probably have gnawed away at the inexorable forces of change that have produced a dreary convergence of the shopping experience around the world (‘Mallification’ to coin a term for it).

Mary’s people magnets

Mary was upbeat and remarkably convincing. (“Sounds very charismatic”, I mused). She avoided almost all the usual business clichés of footfall, consumer value, visions, (not sure about visions, on reflection). Instead she offered ‘her’ map which has something to do with metaphoric ‘magnets’, which pulled people into spaces and places.

The old market-stalls were people magnets, and Mary wants more market stalls to help revive the high street by such forces of attraction.

The Indie trumps the BBC

I expected to find a rapid critique of the report from the BBC but found the most impressive summary in the Independent. It even managed to find a possible vested interests story which I will return to later

An Independent view

The recommendations of the report (with acknowledgement to the Independent) are as follows

1. New ‘National Market Day’ where budding shopkeepers can start a business.

Pro Those who can’t afford property costs will be able to give retail a try without the overheads.
Con Shoppers prefer the low cost but reliability of supermarkets and out-of-town shops. It will be difficult for a ‘Market Day’ to change this.

2. Local authorities to give business rates help to start-up retailers.

Pro Business rates is the great prohibition to start-up retailers, as rates are usually more than 40 per cent of the rental charge.
Con Cash-strapped councils will find it hard to reduce their rates bills, while established local independent retailers will claim an unfair advantage for new kids on the block.

3. Create disincentives for landlords to leave shops empty.

Pro Empty shops are the biggest blight to the high street.
Con Landlords are already struggling to find tenants for vacant shops and are already hit by the large cost of business rates for these empty shops

4. Introduce Secretary of State “exceptional sign off” for all new out-of-town developments.

Pro Could curtail, or lead to more suitable and controlled, developments on the edge of towns which complement high streets.
Con The horse has already bolted. The big four grocers plan to develop 19 million square feet of new space between 2010 and 2014.

5. Put in place a “Town Team” – an operational management team to deliver a vision for a high street. [Oops, there’s that vision thing at last: Ed LWD]

Pro Will allow stakeholders to collaborate and take responsibility for their high street.
Con Stakeholders are likely to have diverging views, and non-retailer and non-landlord participants may not have real clout.

How promising is the Portas plan?

Promising enough to trigger a national debate. Aligned enough to the Prime Minister’s enthusiasm for the Big Society to have his continuing support.

And the undeclared interests story?

The Independent also draws attention to unrevealed interests of Mary Porter:

The TV presenter Mary Portas … laid out her vision to rescue the UK’s ailing high streets but refused to answer questions about her PR company’s links to the big property developer Westfield and other retailers.

Shame. Just as I thought we could have an all-round feel-good story and a new charismatic hero[ine].

Acknowledgements
To the Independent for the précis of the Portas plan; the image of the Prime Minister and Mary Portas and their undeclared interest story. Also to my colleagues and students for introducing me to the Portas phenomenon.