Search Sir Philip Green on Google or Twitter and you will be greeted with a torrent of lurid language. The Sunday Times called the brash and profane entrepreneur a "billionaire bully," while other comments ranged from the indelicate – "subhuman" and "asset stripper" – to the unprintable.
Sir Philip, who in 2006 was knighted for services to retailing, has gone from the king of high street retailing to its rogue. Conservative MP Richard Fuller branded him the "unacceptable face of capitalism."
Sir Philip's alleged sin? Walking away last year from British Home Stores, universally known as BHS, leaving it with a £571-million ($1.1-billion) pension fund hole that its dubious subsequent owners could not fill.
BHS, with about 160 stores in Britain, finally collapsed last week, leaving 11,000 employees wondering whether they will soon find themselves in the fire-sale bin. The failure of the firm triggered outrage across the land, most of it directed at Sir Philip.
While his behaviour was far from exemplary, the end of BHS is more than a tale of greed and bad management; it's a tale of the hell inflicted on traditional retailers who are seeing their business melt away from the deadly combination of shifting consumer habits and demographics and the online shopping surge. Any retailer with an underfunded pension fund beware.
BHS was not a failure for Sir Philip, in the sense that it appears he and his family extracted a lot more money from the company than they put into it.
Sir Philip, 64, has been in the retail game most of his career. His big move came in 2002, when he bought the Arcadia Group and immediately flipped it to his wife, Tina, who is officially a resident of Monaco. Arcadia is the owner of vast array of shops under the banners of Burton, Dorothy Perkins, Miss Selfridge, Topshop and other high-street names.
Topshop, a seller of affordable fashion items, has been a hit among young female shoppers and turned Sir Philip himself into a brand name. He is routinely photographed with his arms wrapped round fashion icons such as Naomi Campbell, Kate Moss and Cara Delevingne, and is known to spend millions on lavish parties on his yacht and in exotic locations such as the Maldives. A birthday present from his wife was a solid gold Monopoly set.
Sir Philip bought BHS for £200-million in 2000, added it to the Arcadia portfolio, and gave it the Sir Philip treatment, which meant cutting costs without mercy and underinvesting in the shops even as competition heated up. According to the Financial Times and other media, capital expenditures on BHS over 13 years starting in 2001 came to just £349-million, well less than the £438-million depreciation charge, suggesting the stores were allowed to age fast. At the same time, Sir Philip and his family vacuumed fortunes out of BHS even as the pension fund was in deficit. Through 2014, the tally for dividends and management fees came to about £1-billion, well in excess the profits reported by BHS over the period.
In March of last year, Sir Philip sold BHS for a token one pound. The new owner, a financial company controlled by Dominic Chappell, a former race car driver with no retail successes behind him, took a bad situation and made it worse. BHS's pension black hole is now being investigated and Sir Philip has been called to Parliament to give evidence on the collapse of the business.
The question is whether Sir Philip's mishandling of BHS was the cause of the retailer's downfall or merely accelerated an outcome that was inevitable. Traditional retailers face formidable obstacles that will make life difficult to impossible for many of them, and their pension funds, in the coming years.
Demographics are working against them. The last generation didn't produce a lot of kids. The kids who do shop are doing more and more of it online. You don't see many teenagers or young adults in department stores any more.
The immediate threat is the relentless rise of online shopping. In Europe and North America, e-commerce is by far the fastest growing sector of the retail market. According to a recent report by Britain's Centre for Retail Research, online retail spending in the eight biggest European Union countries grew by 18.6 per cent in 2015 over 2014, a pace which is expected to continue. The European mean market share of online sales as a portion of the retail market is expected to reach 9.4 per cent this year, though in some countries it will be much higher. The British and the French adore shopping online, as do the Americans.
The report says: "The growth of online sales at the current rate will inevitably reduce the market share of traditional shops."
Traditional shops won't die out. The survivors will have to combine a superb walk-in experience with a compelling online presence, both of which require huge investments. The BHS debacle proved that chain stores whose owners scrimp on investment or reward themselves first are doomed.