Woolworths once had more than 800 stores nationwide. By 2009, every shop had disappeared, more than 30,000 people were left unemployed and a household name was no more.

From the shock demise of Woolworths to the equally alarming collapse of British Home Stores (BHS) last year, the UK retail sector has seen its fair share of high profile casualties. Many blame the global financial crisis, while some say it’s the decline of physical stores in favour of internet shopping – an industry cannibalised by clicks over bricks.

The likes of Jessops, Blockbuster and Clinton Cards undoubtedly became obsolete with the rise of e-commerce, smartphones and downloads. Yet others point to examples of mismanagement, poor financial controls and perhaps a little naivety on the part of the retail leaders.

What’s really going on behind the scenes at businesses that are staring down the barrel of bankruptcy? Is the situation improved or impaired once the administrator steps in to take control? Are there any comms lessons to be learned from those who’ve gone to the brink – and beyond?

The growing list of retailers falling by the wayside has certainly given leaders within the industry pause. Shareholders want assurances that the top team can be trusted, and it falls to the comms team to make sure that leaders are being open and honest with employees.

“If it’s a brand that people know and love, with a founder or CEO who is well liked and respected, it can be very important,” says Rod Clayton, who leads the global issues and crisis group at PR firm Weber Shandwick. “The leader’s influence can be so positive because if there are alternatives available, and measures are in place to help them, employees will want to hear it from somebody they know and trust.”

Mark Bunker, comms specialist and former group communications director at consumer packaging company Rexam, says, “In a crisis, there’s the absolute need for openness, honesty and authenticity in your communications. People smell bullshit a million miles away and organisations need to be aware of that and respond appropriately. Senior leaders must show empathy and get the tone of the messaging right.”

Before it slid into administration in April last year, BHS had struggled with falling sales, a hefty rent bill and a pensions deficit. The problem being that precious little was communicated to staff about it.

Isabel Collins, founder of engagement and culture consultancy Belonging Space, says, “If you don’t give reliable information in such an extreme [situation], that vacuum will be filled…and you risk creating more tension in what is already a highly stressful environment. With BHS, the feeling of horror and hatred that was created [as a result of its collapse] was made all the worse because the company wasn’t honest with employees.”

For communications consultant Stephen Golding, who was part of the integration team at Royal Bank of Scotland following its takeover of ABN Amro in 2007, the government bailout of RBS was in many ways a similar scenario to that of a company going into administration. He says in that kind of situation, employees want answer from the company’s senior leaders.

“As a comms team, you have to say something and reflect on what’s happening in the press. If employees are seeing senior leaders of RBS leaving Downing Street with government officials in tow, they want to know what’s going on,” he says. “Many people had their mortgages riding on the success of the company, so it became very emotional, very quickly, when the share price dropped significantly. With so much change going on and lots of consultants milling around, people wanted answers which often just weren’t there… and there was always the danger that the leadership team would become overwhelmed and go quiet.”

The ill-feeling among employees shouldn’t be underestimated. Clayton adds, “Sometimes a very bad decision is made and it take a few years for it to have a fatal effect. But there’s a lot of residual anger and distress at past management. It is hard to communicate through that because no matter how well you do or how well you handle it, your average shareholder will remember, and will be very upset with people who are long gone and have potentially escaped the consequences.”

There are seldom clear warning signs that a company is going to go bust. If it’s a listed business, investors might scrutinise the financial statements and regulatory news service announcements, looking for issues around debt, consistently declining sales or unexpected changes in leadership.

But the reality is that companies will often try and reassure shareholders that a turnaround is forthcoming, right up until the bitter end. “Up to a certain point, the comms team needs to maintain the veneer of business as usual,” says Lawrie Jones, managing director at Bristol-based marketing agency 42group. “Take the case of HMV [which went into administration in 2013]… if it had acknowledged that the business was failing too early on, the public perception of it might have changed.”

Five companies that have gone bust since 2012 BHS When 88-year-old retailer BHS went into administration in April 2016, it put 8,000 employees, 3,000 contractors and 164 stores at risk. Its £571m pension deficit was also of chief concern. In the end, the retailer had failed to secure the emergency funding that it needed to pay wages and rent. Clinton Cards Founded in 1968, this specialist retailer had, at one point, more than 1,100 shops and 25% of the market. But rivals like Moonpig and Funky Pigeon, which allow cards to be customised and posted online, sent the established brand into administration in May 2012. lowcostholidays Mallorca-based online travel agent, Low-Cost Holidays, sold flights, accommodation and transfers. Its collapse, on 15 July 2016, was blamed on the fall of the pound following the EU referendum result. Some 140,000 paying customers were left in limbo, including 27,000 who were already abroad at the time. Jessops Another specialist retailer, launched in 1935, Jessops had some 200 shops and 1,370 staff during its peak. It couldn’t keep up with the likes of Amazon or the smartphone revolution and entered administration in January 2013 – although it was rescued by entrepreneur Peter Jones. Rangers Football Club Glasgow Rangers entered administration in February 2012, the result of a cauldron of financial problems and mismanagement. Debts were estimated to be over £130m and the club was docked 10 points in the Scottish Premier League – effectively ending the club’s title challenge.

Jon Moulton, the private equity tycoon and chairman of Better Capital, which acquired Jaeger in 2012 – before the high street fashion chain went into administration last year – adds, “As long as there is a prospect of avoiding failure, the external and internal messages will be to encourage stakeholders to stay with the business. However, this should not extend to overstatement of the company’s position as such action would be morally and potentially legally bad.

“Post failure,” Moulton says, “it’s up to the administrator, who generally does not much care about the message unless it aids his realisation plan where he may need it.”

In BHS’ case, administrators Duff & Phelps took over day-to-day control of the retailer from the incumbent management team and were tasked with repaying those who were owed money. They reviewed the company’s books and assessed what support there was to keep the business trading.

Administrators will naturally want to have some sort of control and oversight of the messages being sent out. “Once the administrator is appointed, it controls the message,” says Simon Howson-Green, head of crisis and reputation management at Yellow Jersey PR. “The issue is that the administrator might become a roadblock to the flow of information… and reputations can be damaged when someone else is telling the story.”

Clayton adds that the administrator has an interest in maintaining the organisation’s reputation, “Communication plays a very important role in maximising value and crucially, in preserving valuable reputation. That’s a key area where the administrator will want to pay attention and it will often be important for them to work with the existing comms team, who’ll be most familiar with the promotion and protection of the brand and the company’s other assets.”

It’s vital, too, that someone reviews the scheduled communications, such as social media posts, press interviews and special promotions. Take lowcostholidays – on the day that the online travel company went bust, an online ad could be found boasting, ‘Our holiday sale has been extended for a limited time only. Grab your lilo and go.’

Likewise, the day BHS went into administration, the company’s official Twitter account @BHS_UK was tweeting the details of a competition with the phrase, ‘Happy Monday! It’s competition time.’

Best practice crisis planning should apply, as it would in any situation where leaders are having to make big decisions. Bunker, who was part of the risk team at Lloyds TSB when it acquired Halifax Bank of Scotland (HBOS) in 2008, says, “Administration is one of those scenarios that people don’t really want to have to think about. But communications directors need to be thinking about them as part of the overall risk planning in the business.

“Spending at least one day in a year rehearsing a crisis with your senior team isn’t really a big deal, and it will pay off. Having your spokespeople ready and knowing what you’re going to say – even if you have to refine it for the specific crisis in hand – has got to be better than starting from scratch.”

Howson-Green adds that, for regulated companies, the in-house comms team is best placed to understand the guidelines and compliance culture governing what is allowed to be said on social media. “In a situation like administration,” he says. “They will need to keep monitoring what’s being said and be prepared to respond when necessary. You must keep comms channels open.”

Timing and delivery must be tailored to the situation. But avoiding hard truths, or having a half-hearted approach, will only serve to create a negative view of the business and the people who represent it.

If administration really is the death knell for the company, the leadership and comms teams might 
be advised to try and give it a proper send off. 
“Treat it like a wake,” says Collins. “I grew up in the north east at the time when most people’s dads worked for ICI or [previous incarnation of] British Steel, and when [those companies ceased to be]…it was the end of a certain way of life for many people.”

She adds, “Remember, you’re not just closing a business. It’s an event that will impact people’s lives. That’s why I think there’s a responsibility beholden on business leaders and internal communicators to wind things down with the appropriate respect that the situation deserves.”