Retail brands We've Loved and Lost - and the Part That Property Plays

Loved and Lost: The Evolution of Retail Brands - and Their Property Portfolios

In this episode of 'That Retail Property Guy,' host Gary Marshall explores the intersection of estate management and retail tenancy, focusing on the demise of beloved retail brands. Gary shares insights on the potential sale of WHSmith's property portfolio and reminisces about lost brands like Woolworths, BHS, and Debenhams. He also discusses the financial struggles faced by retailers, the impact on local communities, and what alternative strategies, like Company Voluntary Arrangements (CVAs), could have done to possibly save them. The episode concludes with a call to not hastily close businesses but seek expert advice to explore sustainable options.

00:00 That Retail Property Guy

00:24 The Decline of WH Smith and Other Retail Giants

01:00 Nostalgia for Lost Brands

02:58 The Impact of Store Closures

06:56 Rescue Stories and Survival Tactics

07:49 Understanding Financial Struggles in Retail

08:35 Navigating Lease and Rent Challenges

12:30 The Role of CVAs in Retail Survival

14:34 Reflecting on Woolworths and Lessons Learned

15:56 Conclusion and Final Thoughts

Historic England on the demise of Woolworths

WHSmith in talks to sell all stores (Retail Gazette)

Times UK on Carpetright customers owed £8m

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Transcript

0:00

Welcome to That Retail Property Guy with your host, Gary Marshall. In each podcast episode, we delve into topics relating to the particular overlap between estate management and accounts payable from the perspective of a retailer as tenant. Sharing stories and insights through Gary's unique lens, we hope you'll be entertained, enlightened, and maybe a little inspired. News sources this week, including the Retail Gazette, shared developing news on the possible sale of the whole property portfolio of WH Smith. I saw that and thought, oh, there goes another one. The deep baseline of Queen's Another One Bites the Dust suddenly sprang to mind. For years, WHSmiths was the staple, the go to for all our stationary needs, especially for back to school. It seems sad that it might no longer grace our high streets and retail parks. And this put me in mind of other famous brands that we have loved but lost over the years. Hands up who remembers Woolworths? This national brand, but local favourite, went under in January 2009. After 99 years, pretty much due to being over leveraged, and that becomes a familiar theme in this episode, where we discuss how brand names come and go as a bricks and mortar retail presence in your local high street, retail park, or shopping centre, otherwise known as a mall by our non UK friends, and how some become stalwarts of the retail scene, and how others last but a while. Although leave a lasting memory, almost a cultural imprint. And how, maybe, something different could have been done about it. Like Woolies. Many people claim to miss Woolies for the pick and mix. Although if you believe all the stories of young rebels who used to pinch the stuff, the volume of pinched pick and mix would probably exceed the actual supply of pick and mix. I have a personal interest in the much missed brand of Woolworths. I was part of the estates team at the time. More on that later. Wilkinsons seem to pick up where Woolies left off. There's a lot of coverage online about where their money went, but this was another long standing business, 92 years old with 400 stores, when it closed. And if people miss Woolies for the pick and mix, well, I miss Wilcos for their festive Panettone, easily the best tasting and best value for money on any high street. Other big space users include Debenhams, which again, closed its stores between 2021 and 2023. It moved successfully online, but I'm treating it as gone from the high street. And if we reach further back, big space fashion has taken a bit of a hammering over the last decade or so. British Home Stores, BHS, was another famous and loved brand. It shut its doors in June 2016, after efforts to secure a rescue deal proved unsuccessful. It had been around for 88 years. It had 160 plus stores, so its closure was a big impact across the nation. And of course, when stores close, it's not just the customers who are let down. People lose their jobs, and maybe their pension pots, possibly their self esteem. We don't just lose an opportunity to buy something. We lose part of the structure of our lives. Other businesses can be quick to jump in. ASOS and Boohoo were keen to acquire brands within Philip Greene's Arcadia empire like Topshop, Miss Selfridge, Dorothy Perkins, Burton's. Taking them online, but making them vanish from the high streets. Other retail fashion brands have also succumbed. Long ago, we can consider the loss of C& A. More recently, Ted Baker. But it wasn't just fashion. We also lost the popular brand, Carphone Warehouse. I was always amazed that you could go into one of their stores and get a deal on a handset and a package, with a provider like O2, at a better price than you could from the actual O2 shop nearby. Carphone had been a real success story, from humble roots in a bedroom, hustling mobile phones as big as house bricks, right through to the latest smartphones and all the accessories. Part of the Currys group, the business made a conscious decision to close its doors in 2020. And coincidentally, this was just a week or so before COVID lockdown. But even through lockdown, the Currys Estates team were extremely successful in disposing of the vacated units. So, hats off to them! There are many more. Over the years we lost MFI, we lost Comet, we lost Maplins, Toys R Us and Staples, although again this is still available online. Quite recently we lost Homebase, the UK's second biggest in the DIY and garden sector. And of course, as one brand closes, another might take its stores. In this case, noticeably, The Range, Sainsbury's, and B& Q picked up former home based units. Even further back in time, we lost Blockbuster, and Athena, the poster store, with its famous, or should I say infamous, tennis player. So hands up if you ever bought a poster from Athena, a vinyl record from Our Price, or a silk tie from Tyrak. More recently in 2024, we lost Carpet Right. This is an interesting and complex case of money, valuable assets including intellectual property, hedge funds, and poker players. The legalities are complex, so I'm not going to try to summarize them here, but which consumer rights expert, Gurpreet Shokar, said it is shocking that carpet right customers could still be owed 7. 6 million after the business fell into administration. Apparently, the business left 21, 000 customers with unfulfilled orders and no refunds. And apparently, a further 350 million owed to landlords, suppliers and tradesmen. After this episode, maybe follow the link in the show notes to the article in the Times. It's a good read. And not all loved but lost brands are big multiple chains in huge retail centers. What about the smaller high street chains? Recently there was a lot of press and social coverage about the closure of Hadfield's Bakery from Huddersfield with the loss of 13 retail stores and a bakery. They cited competition and rising costs, including energy bills, for the impact on cash flow. Which meant it was unable to pay wages. They hoped for a rescue package, but that didn't come through. So in the end, it was bad news for customers, bad news for employees, just bad news in general. We used to be in love with our high streets. We relied on them for convenience, for choice, for community. And yet we all Okay, mostly all, buy online without a thought for the impact on our built environment, our town centres, and the domino effect that one closure often begets another. As a larger store might have acted as an anchor, a magnet, drawing in the customers that neighbouring small retailers depend on. And the other small retailers act in self support groups, so it takes a bunch of them to make a visit to the high street viable. But of course, not all stories end the same way. Monsoon went into administration after the COVID lockdown. And usually, administration is the precursor. Closures, job losses, end of the line. But Monsoon bounced back. They were bought out of administration in June 2020 by the original founder, Peter Simon, with a transformation plan. So Monsoon continued to fight, And by the end of December 2021, the business was debt free. In fact, it had cash in the bank. It had transformed, it had fewer shops, and not everywhere and everyone survived the cull. But sales and profits increased, and it came out of administration smaller but stronger. Hurrah! So let's consider what happens when the vultures are circling. What's the underlying process? What rescue packages might be available, though sadly not now, to Hadfield's Bakery. For starters, let's recognize that not every closed business is or was a failed business. Some retail brands close their doors through strategic reorganization or by being absorbed into bigger entities. Carphone Warehouse was part of the Currys group, and you can still buy a mobile phone, and much more, through any Currys store. Some close because they've had their moment. Tastes and demands change. I'm sure sales of sweatpants went up exponentially during the pandemic, but hands up anyone who's bought a tie in the last few years. Okay, there are independent stores that support niche stuff, but big brands, with stores in multiple locations, can come and go as fashion, technology, and society changes. Let's move on to the nitty gritty of money, leases, rent, and rates. Some brands do get into financial difficulty, whether that's external pressures like rising utilities and rates, or internal pressures Like the owners pulling all the money out. Sometimes the brand could survive, or at least emerge like a phoenix, if it could just shed some of the heavier obligations, which might mean restructuring some loans, making redundancies, or culling some non profitable stores. But now, establishing which stores are unprofitable and why is a complex science. In another episode, we discuss the impact of business rates, where an appeal against an excessive charge can take years. There might be an eventual refund, but in the meanwhile, the retailer has to keep funding the excess payment for year after year dragging an unnecessary excess weight. And the burden? Might be rent rather than rates. Many retailers are still awaiting lease expiry, or should I say lease renewal? More on that in another episode. Giving them an opportunity to take advantage of a realistic renegotiation of rents down from a higher level agreed many years ago. Mid lease rent reviews often don't allow decreases, but expiry or renewal allows an opportunity to negotiate a market rent. But some retailers, especially smaller independent retailers, often don't appreciate their statutory rights under the Landlord and Tenant Act 1954, or understand their leverage in the current economic climate. I've seen small but successful operations close, perhaps because, at lease expiry slash renewal, their landlord quoted a high rent. And maybe demanded some dilapidation work and just pushed the operator to decide we can't afford this. Years later, the premises remain vacant, the shop building is deteriorating, the landlord's getting nothing, the property next door is suffering due to a kind of blight. It's a domino effect. So before opting to close, a retailer should consider whether costs could be reduced, whether there is a light at the end of a very long tunnel, and whether that could be brought forward by skillful negotiation. And if this scenario sounds familiar, like it could apply to your business, I implore you to reach out and get some good advice from a property professional with experience and expertise in this specialized sector. Not just the local general practice estate agent, but a well informed retail commercial agent with a track record of assisting tenants. Don't just jump, I suppose I'm saying. Do your homework. Fully understand if your financial burden could be avoided if you wait it out, or brazen it out. So back to that point, that not every closed business is or was a failed business. There's a difference between closing A closed business might exit the market without debts, having a clean slate, having been successful, but no longer being the right thing for the owner. By comparison, going bust is basically where the business owes too much money to creditors, which could include HMRC, The bank, landlords, other suppliers, and so on. Bear in mind that even a business which owes more than it holds in cash and assets can still continue to trade, so long as it has enough cash to pay for essential activities and that no one is applying pressure, such as a creditor opting to call in a debt. But once a creditor starts that process, the situation can change pretty quickly. Whether the retailer is a company or an individual person, this action might start with a statutory demand or a winding up petition. Unless the retailer can quickly clear those debts and get the action removed, it might find itself blocked. Its bank accounts might end up frozen. All manner of nasty stuff. For a retailer tenant with many leases, possibly including a few at quite unrealistic rents, one option might be to have a friendly discussion with the landlords to see if some changes might be made like a lower rent or a rent free period and if the landlords are not amenable to this and let's face it they have some difficult choices too then the next option might be a cva a company voluntary agreement which becomes a legal binding arrangement with landlords and other creditors. It allows the retailer tenant to propose a restructure and to set up a plan to deliver itself out of difficulty. Though some landlords and creditors might not get everything they'd hoped for, it's a useful halfway house that can help avoid destroying an underlying profitable business and leaving lots of unhappy creditors. In return for a smaller number of unhappy creditors. Basically, it avoids everyone going down with the ship by facilitating the jettison of a few selected heavy burdens. A CVA requires the agreement of 75 percent of the creditors based on debt value. So it's not one creditor, one vote. It's more like proportional representation based on the amount of debt a creditor is owed. A CVA helps the underlying business manage its preferential and unsecured debts. Again, this is a specialised area, so if you think this applies to you, then seek advice from an expert in the sector. The CVA provides basic protection against winding up petitions and demands from HMRC, while the business restructures itself. Most important in our specialised niche is that it allows contracts to be terminated without the usual problems, and this includes leases. Supplier contracts and employment contracts. So, in theory, a CVA could help a struggling retailer to identify their burdens, maybe an over rented shop, and hand it back to the landlord. Almost, but not exactly, as simple as that. Unhappy landlord, yes, but taking the hit for the greater good. For the benefit of all the other landlords, suppliers And as we close out this episode, let me return to the opening comment about Woolworths. Their demise perhaps led the field in this new way of looking at retailers in difficulty. They were possibly the last victims of the old school approach pushing a company to the wall when it couldn't service its debt, instead of trying to figure why it couldn't service its debt and fixing that problem instead. I have no doubts that a CBA could have helped dear old Woolies to weather the storm. But at that time, it just wasn't the standard approach. So it was forced under. Employees, landlords, and suppliers all lost their income streams. In fact, in my humble opinion, the only parties that benefited were the administrators themselves, who charged maybe a small fortune to handle the process. Of course, I might have the wrong end of the stick on that. Maybe the administrators were the good guys. So here we are, 16 years on from the loss of Woolworths on the UK retail high street, but still in our hearts. It's a personal story for me and possibly the moment where the seed was sown to champion and always support the retail tenant. It's not just business, it's people, it's livelihoods, it's lives. Check out the links in the notes below to follow this topic and maybe take a pause before assuming that your retail business has to face the inevitable. Thanks for listening. Thank you for listening to That Retail Property Guy. I hope you enjoyed today's discussion and found it both entertaining and insightful. Don't forget to explore more episodes, and be sure to like, share, and subscribe so you can never miss an episode. For more information, visit ThatRetailPropertyGuy. com. Thanks again for tuning in.