Sir Philip's grand designs for Bhs
At 57 years old and several billion pounds to the good, you might think that retail entrepreneur Sir Philip Green would be thinking of hanging up his boots. But the burly tycoon who five years ago was rebuffed in his effort to takeover Marks & Spencer is as restless and ambitious as ever.
Whereas many retailers are struggling to survive the slump, he is anxious to expand. Indeed, he is as ambitious now to take his retail empire to the next level as at any time since he took control of Bhs in 2000 and Arcadia — then run by his mate Stuart Rose — in 2002.
Much of Sir Philip’s focus in recent times has been on his most successful enterprise, Topshop, a high street leader in fast fashion, from which he paid himself a £1.3 billion dividend — a sum which he claims could have been £1 billion higher.
At Topshop, Sir Philip has created a supply chain which allows stock in his stores to turn over each month, so there is always something new for the punter. Earlier this year he, together with his “fashionista” designer Kate Moss, took the Topshop concept to Soho in Lower Manhattan — where rents are just 25 per cent of those in the more expensive parts of New York.
His first fully owned and operated store overseas has been an enormous success, with a turnover 40 per cent above forecasts. Now he believes that he has the formula to take Topshop international. Miami is the favourite for the next opening but he has also set his sights on stores in Los Angeles, Washington DC and Boston. On a broader canvas, he believes that the major European cities and Far Eastern centres such as Hong Kong and Shanghai also offer opportunities.
But while Topshop has been dynamic, generating the larger part of the £450m of pre-tax, dividend and interest earnings of his stores empire, Bhs, with its dowdy image, has been more troublesome. Now Sir Philip has a new model. He is merging Bhs with Arcadia, his fashion retail arm, and intends to change the concept.The aim of the merger is largely marketing-led. Sir Philip intends to bring some of his “secondary” fashion brands from the high street including Wallis, Burton, Evans and Dorothy Perkins into Bhs stores, turning them into multiple boutiques. At the same time, he is upgrading Bhs’s lighting and furnishings collections so that they can compete with the best on the high street, including M&S. The new furnishing collections have been assembled at showroom/warehouse on London’s Marylebone Road, adjacent to Sir Philip’s Bhs headquarters.
He and his marketing team have been trailing the new Bhs concept in key stores, and the formula seems to work. The Bhs name will remain in place, but fascias have been redesigned to include the other brands from the high street. Topshop will remain a separate entity because it aims at a younger, trendier market.
Sir Philip is also enthused by the economics of the new concept. In the first instance, many of the older Arcadia stores (he has more than 2,000 overall) are too small and the leases are coming up for renewal over the next couple of years. So his new Bhs boutiques will give him better and larger sites (at a lower cost) to sell fashion goods. At the same time, the merger of Arcadia-Bhs will allow him to begin eliminating overlapping back office, supply, distribution and other costs. He intends to keep the marketing and the design teams, but the creative part of the businesses will be separate.
As well as dealing with the Bhs problem, the relatively low returns from a great deal of floor space, Sir Philip’s new concept, a merged Arcadia-Bhs, will be easier to run. There will be no rushing from one headquarters to another as he seeks to reshape the business. It also makes for a cleaner, low-debt retail structure at a time when he feels there are few major deals to be done on Britain’s high street.
Moreover, if he eventually does decide it is time to spend less time at work, he will have an enterprise to launch back on the stock market from where it came. Sir Philip is also working flat out on his new showbiz/merchandising enterprise with his pals Simon Cowell and Kate Moss. This project is still “in the cookie jar” but Sir Philip reckons it could become as large, if not larger, than his previous ventures.
Alex Brummer is City Editor of The Daily Mail