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Harrods Seeks to Be All Things for All People: Retail

Photographer: Jason Alden/Bloomberg

Harrods luxury department store in London, on June 24, 2013. Harrods, which has more than 1 million square feet (90,000 square meters) of selling space, isn't concerned about the outlook for spending on luxury goods. Close

Harrods luxury department store in London, on June 24, 2013. Harrods, which has more... Read More

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Photographer: Jason Alden/Bloomberg

Harrods luxury department store in London, on June 24, 2013. Harrods, which has more than 1 million square feet (90,000 square meters) of selling space, isn't concerned about the outlook for spending on luxury goods.

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 jewelry 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.” Today, 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 more modern-feeling shops, so they have quadrupled investment, culled mid-priced brands and are refurbishing the 4.5-acre, seven-floor store to clear space for Stella McCartney and Fendi SpA fashions.

Younger Britons

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. “We tend to be Marmite,” Ward said, referring to the British food spread whose distinctive salty flavor divides the nation into lovers and haters. “You will never win everyone over.”

A more modern Harrods would attract younger Britons and leave the store less dependent on overseas shoppers whose spending can be impacted by currency fluctuations and political instability, said Verdict Research analyst Honor Westnedge. Harrods is also battling luxury online merchants and new high-end shopping centers in Dubai and Southeast Asia.

Qatar Holding, the investment arm of the country’s sovereign-wealth fund, paid 1.5 billion pounds ($2.3 billion) for Harrods in 2010. The Qataris boosted store investment to 108 million pounds in the year ended January 2012, up from 24 million pounds in 2009. They want “a strong return on their investment,” Ward said from his sixth floor office, dressed in a navy Harrods own-brand suit and a Stefano Ricci red silk tie.

Sales Outperformance

Under his leadership, the brand is outperforming the sector -- Harrods’ sales rose 11 percent to 652 million pounds, excluding concessions, in the year ended January 2012, the most recent data available, compared with a 4 percent gain for the broader U.K. department store sector that year.

Selfridges Holdings Ltd. sales rose 5 percent to 464.8 million pounds, including concession commission in that period, according to a filing with Companies House. That figure excludes value added tax, according to the filing. Selfridges didn’t return calls today seeking comment.

Selfridges is more innovative than Harrods and better at targeting younger Britons, Verdict’s Westnedge said. Featuring the world’s largest shoe department and handbag brands from 69-pound Dune totes to exclusive 1,800-pound Delvauxs, 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 SA (MC), and Kering SA-owned Gucci and Stella McCartney.

5,300-pound lampshades

More profitable fashions helped boost Harrods’ operating profit 15 percent to 125 million pounds in 2011, according to statements filed to U.K. registry Companies House. And they appeal across the board to all potential patrons -- British or otherwise, he said.

Harrods is also sprucing up other departments to capitalize on growth in luxury spending. The store’s refurbished fine spirits room today began displaying a 12-bottle collection of Dalmore whiskies costing 987,500 pounds.

Yet compared with Selfridges, Britain’s second-biggest department store, 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-pound Current Elliott jeans. Selfridges, though, has added an online “denim lovers” campaign that encourages shoppers to post photos of their favorite 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 pounds on beauty products there. “Harrods didn’t even cross my mind. It’s a bit old-fashioned.”

To contact the reporter on this story: Sarah Shannon in London at sshannon4@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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