A reorganization within the store forces the staff of the Gentlemens Ready-To-Wear Department to share their floor space with the Ladies Department. Mrs. Slocombe, head of the Ladies, and Mr. Grainger, head of the Gents, immediately come to loggerheads over control of the center floor display. Mr. Grainger refuses to take down his trousers and put Mrs. Slocombe's underwear in its place. Undaunted, she goes over his head to Captain Peacock, and then to Mr. Rumbold.
Mr. Lucas attempts to send Miss Brahms a love letter suggesting an after-work "get it together". Confusion on who sent the letter and to whom it was intended sets the stage for a lot of misunderstanding. There's also the customers to contend with and Mr. Lucas has a devil of a time fitting them into clothing.
The Department figures have taken a dive and so Mr. Rumbold decides to convene a sales conference amongst the staff. Since the meeting is taking place after hours and off the clock, no one is very motivated to provide any solutions. If something isn't done, someone might lose their job, and that someone is clearly Mr. Lucas.
Mr. Grainger's trousers are missing, along with the central display. The staff learns that the space was freed up for the "His & Hers" fragrance display. Mrs. Slocombe is outraged that they went her to take down her underwear and put perfume there in its place. The glamorous salesgirl causes stirrings in the trouser department. When it's discovered that free stockings and ties are given out with every scent purchase, both departments formulate a plan to oust the intruder.
It's pay day at Grace Brothers and the staff realize that their money just doesn't go very far. An opportunity for a bonus arises when a customer loses a diamond and offers a £100 reward. Greed gets the better of everyone, except Mr. Grainger, and soon they're conspiring behind each others backs. Mr. Mash throws a wrench in the search after he damages a jeweled dress, causing a multitude of "diamonds" within the department.
Sales are falling once again and so Mr. Rumbold calls together a "think tank", a suggestion he "borrowed" from Captain Peacock. The staff decide that a fashion show would be the answer, but when Young Mr. Grace won't cough up the dough to hire proper models, the staff are forced to put on the show themselves.
There's trouble afoot at Grace Brothers! Someone's been lifting Mrs. Slocombe's skirts and putting their hands in Mr. Grainger's drawers. Shoplifting has struck the store and Mr. Rumbold installs a store detective and a video surveillance system. It goes off track for awhile, as Mr. Rumbold turns into a voyeur and the staff act like they're on television. Ultimately, the staff decide to do in the scheme and prey on Mr. Rumbolds hypochondria to accomplish it.
Mr. Humphries begins displaying his ability to read palms and tell the future. He sees that Captain Peacock will soon be "climbing the ladder and wearing a new hat". Everyone takes this to mean a promotion, especially now that there's a vacancy on the Board of Directors and Mr. Rumbold is in line for it. Captain Peacock expects to take Mr. Rumbold's job. The department staff soon all imagine moving up.
Captain Peacock is celebrating his 20th year at Grace Brothers, and while his request for a raise has been turned down, he has been given a key to the Executive Wash Room and the privilige of eating in the Executive Dining Room. He lords this over the department staff and Mr. Grainger decides to make some trouble.
Mrs. Slocombe thinks she's finally got her man, a bouzouki player in a Greek restaurant. The staff plan a reception at the store to help keep costs down, and her American uncle plans on giving the happy couple a house. Before they can leave for the church, however, the best man arrives with bad news, forcing Mr. Tebbs to don the garb of a Greek vicar and Mr. Humphries that of the bridegroom.
It is Young Mr. Grace's birthday, and the staff sing the traditional birthday song for him and enjoy the traditional free lunch. They later rehearse their cabaret performance for Young Mr. Grace's birthday party, a ballet called The Ballet of the Toys. A professional cabaret troupe will also be performing at the party, and when the troupe arrives, it turns out they themselves will be performing The Ballet of the Toys, which forces the staff to go to Plan B.