No Silver Lining From BHS's Collapse

The plethora of shops sweeping up sales won't leave a clear winner

For years, BHS has seemed like it was perennially on sale. This time it really was. But no buyer came forward.

The end that had been in sight for years has finally arrived. The department-store chain, which fell into administration last month after being sold by Philip Green for a pound a year earlier, is to be liquidated after rescue efforts failed.

This is devastating news for the retailer's 8,000 directly employed staff and the further 3,000 contractors who work there.

It isn't great news for the rest of the high street either. Rivals shouldn't expect a boost when BHS disappears.

Fragmented Market

BHS's small share of the U.K. clothing market is likely to be dispersed widely

Source: Verdict

When white-goods and electronics retailer Comet collapsed in 2012 -- the last big retail administration -- rivals received a fillip.

Dixons -- now part of the DixonsCarphone group -- and Argos were among the retailers that saw a significant benefit that followed their market shares. It was also helpful that Comet's collapse came in the midst of the boom in tablet sales.

It's a different situation this time around.

Home Fires

BHS's home furnishings business will also be spread across a number of rival retailers

Source: Verdict

First of all, BHS's share of industry sales is small. It accounted for just 1 percent of the clothing market by value in 2015, according to Verdict. The share in home furnishings was just 1.5 percent, despite BHS being known for its good-quality lighting.

In addition, the categories BHS is biggest in -- clothing and homewares -- are highly fragmented. The big range of shops that are set to sweep up a small amount of takings means the overall benefit will probably be pretty limited.

In home furnishings, Dunelm and John Lewis, the two biggest players in the market, will benefit. Argos, which caters to more price-sensitive customers, and discount shops such as B&M could also pick up some sales.

In clothing, Marks & Spencer, Next and Primark -- Britain's three biggest clothing chains by market share -- will inevitably win some business.

But some of BHS's clothing sales could equally find their way to the likes of discount clothing chains such as Matalan and Bon Marche -- which focuses on an older customer base -- and fashion brands at supermarkets such as Wal Mart's Asda.

What of Philip Green? Leaving aside the grilling he faces by lawmakers for his role in the chain's deterioration, his brands such as Dorothy Perkins and Wallis may struggle to make up for the sales in BHS, where they had big concessions on the department store chain's shop floors.

There's another, more immediate wrinkle. The wind-down of locations, with assistance from retail restructuring group Hilco, inevitably means a big closing down sale. 

That is likely to disrupt high street trading elsewhere, just as British shops are already under pressure. As Gadfly has noted, the consumer has turned gloomy amid a signs of a cooling economy and concerns over the referendum on Britain's membership of the European Union. A recent bout of unseasonably cold weather hasn't helped either.

And empty BHS shops blighting high streets won't do much to lift the mood.

All in all, there's not much silver lining here.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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    Andrea Felsted in London at

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    Jennifer Ryan at

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