Harrods tries 'modern' on for size in store revamp
Eyeing younger customers, the Qatari owners bankroll retail institution's quest to stay relevant
Anne Long hasn't set foot inside Harrods in years, and the self-proclaimed shopaholic from west London doesn't miss it at all.
"I don't even think about Harrods. It's for tourists, not locals," said Long, a 68-year-old retired businesswoman who prefers to do her jewellery and fashion shopping at rival Selfridges.
For many British shoppers, the 164-year-old Harrods evokes a bygone era when Sigmund Freud, Oscar Wilde and members of Britain's royal family walked its aisles and the retailer introduced England's first "moving staircase". Its dress code still bans flip-flops, Bermuda shorts and "unkempt clothing", and there's a bespoke stationery service on the second floor.
Now, a push is on to update the stuffy image of Europe's largest department store. To stay true to the motto that's engraved on the store's neoclassical facade - Omnia Omnibus Ubique, or All Things for All People, Everywhere - Harrods is embarking on a revamp. Its owners want to lure back Britons who've been dazzled by the bright lights of Selfridges and other shops with a more modern feel, so they have quadrupled investment, culled mid-priced brands and are refurbishing the 1.8 hectare, seven-floor store to clear space for Stella McCartney and Fendi fashions.
Harrods has already increased the ranks of British patrons under the tenure of managing director Michael Ward, though he declined to disclose the jump. Even so, the store is in need of freshening.
A more modern Harrods would attract younger Britons and leave the store less dependent on overseas shoppers whose spending can be affected by currency fluctuations and political instability, Verdict Research analyst Honor Westnedge said.
Harrods is also battling luxury online merchants and new high-end shopping centres in Dubai and Southeast Asia.
Qatar Holding, the investment arm of the country's sovereign-wealth fund, paid £1.5 billion (HK$17.5 billion) for Harrods in 2010. The Qataris boosted store investment to £108 million in the year to January last year, up from £24 million in 2009.
Under Ward's leadership, the brand is outperforming the sector - Harrods' sales rose 11 per cent to £652 million in the year to January 2012, the most recent data available, compared with a 4 per cent gain for the British department store sector that year.
Selfridges is more innovative than Harrods and better at targeting younger Britons, Westnedge said. Featuring the world's largest shoe department and handbag brands from £69 Dune totes to £1,800 Delvaux, Selfridges attracts the "seriously rich but also the not-so-rich", says Tracy Wandsworth, a 42-year-old mother of three.
To win back some of those customers, Ward said he plans to do "a bit of trimming" of mid-tier items, replaced by brands like Fendi, the Italian fashion merchant owned by LVMH Moet Hennessy Louis Vuitton, and Kering-owned Gucci and Stella McCartney.
More profitable fashions helped boost Harrods' operating profit 15 per cent to £125 million in 2011, according to statements filed with British registry Companies House.
Yet compared with Selfridges, Harrods isn't trying enough new things to generate buzz, according to analysts.
This year, both stores have introduced expanded denim boutiques with specialists on hand to ensure the perfect fit of, say, £199 Current Elliott jeans.
Selfridges, though, has added an online "denim lovers" campaign hat encourages shoppers to post photos of their favourite jeans on Twitter.
"I know I'll get to see all the latest fashions and some of the high street brands if I come to Selfridges," said Sarah Petley, a 33-year-old teacher from Birmingham, after spending £100 on beauty products there. "Harrods didn't even cross my mind. It's a bit old-fashioned."