The decline in the number of overseas visitors to Britain has had
an impact on Harrods. Suzy Bashford asks what measures the store can
take to stay ahead of its rivals.
The sight of Harrods lighting up Knightsbridge in all its Christmas
splendour would be enough to make even Scrooge feel festive. Or so
Mohamed Al Fayed, owner and chairman of the exclusive department store,
will be hoping as he seeks to make the best of a bad year.
If Al-Fayed were to make a wish for the New Year, no doubt he would ask
for US tourists to return to the British capital. On an average day
100,000 shoppers peruse the store floors and about 40% are tourists. But
falling consumer confidence post-September 11 is not the store's only
Harrods' profits fell from £39m to just over £20m in the 12
months to last January, on turnover up just 2%, in its annual accounts
It has blamed the foot and mouth crisis for disappointing sales, albeit
prematurely as it listed the disease as a reason for poor performance in
the year ending January 27, 2001 - before the first case was even
Harrods also blamed Britain's beleaguered rail network and the
The past couple of years have also seen Harrods lose Prince Philip's
royal warrant, and the Queen bestow her patronage on rival
Nevertheless, the New Year could herald a fresh start for Harrods. It
has just appointed its first ever female managing director, Marty
Wikstrom, and last week poached The Body Shop marketing director Ronnie
Helvey to take up its chief marketing role with a brief to launch a
credit card-based loyalty programme (Marketing, December 13).
But Harrods will have to keep a close eye on the competition. Selfridges
has reacted to the fall in tourism by ploughing £300m into a
glamorous revamp of its flagship Oxford Street store.
In the face of such difficulties, how can Harrods retain its status as
London's most revered store? Marketing asked retail consultant Richard
Hyman, chairman of Verdict Research, and Penny Herriman, a board account
director at Bartle Bogle Hegarty, who has worked on Selfridges.
Harrods' turnover, profit and adspend 2000-2001
Year ending Year ending
January 2001 January 2000
Turnover £435.9m £426.8m
Profit before tax £20.2m £38.9m
Adspend £3.9m* £5.7m*
Source: Harrods; adspend from ACNielsen-MMS; *figures are October to
Harrods is one of the best known brands in Britain today and, in an era
of exaggerated claims for global reach, is one of the few with genuine
As often happens in business, strengths can sometimes bite back and in
the wake of September 11, the significant slowdown in overseas visitors
has robbed Harrods of an important chunk of revenue.
However, it is unlikely to have a lasting impact and as overseas travel
recovers, so too will the attractions of Harrods.
Its pulling power is unique. Verdict's research shows that 73% of all
Central London tourists said they would visit a department store on
their trip and of these, 72% said Harrods was the must-see store.
Having said all this, Harrods certainly needs to run faster today than
ever before. Greater competition, especially from a rejuvenated
Selfridges, means it needs to continually reinvent itself, albeit with
variations on the original theme rather than radical reconstruction.
The competition is chipping away rather than offering the true big store
retail theatre experience that remains unique to Harrods.
'Omnia omnibus ubique' or to you and me, 'all things for all people,
everywhere'. Harrods' motto aptly reflects the store's vast range of
goods and international appeal.
The Knightsbridge store is still comfortably sitting in the top ten
traditional British things to do and is still a spectacle for foreign
visitors. But what happens when your reliance on overseas wallets dries
Last year, Harrods declared that it wanted to represent "new, modern
luxury" without alienating its traditional market. Not an easy task.
Wanting more groovy young things is fair enough, but if you want to
attract those customers, you have to offer more than luxury designers,
posh toilets and a piano that plays itself.
The Harrods brand needs to start talking the same language as those
young people with deep pockets. Start behaving more like an
entertainment brand by offering an experience, shows, and
It doesn't necessarily mean that they should revamp the bits that my
mother loves, but what about one area dedicated to me? Harrods needs to
reinvent itself so that locals want to go there for the 'Harrods
Experience'. The more interactive the better.
- Senior management turnover has been too high. Continuity and
consistency are vital.
- Avoid radical change; Harrods faces stronger competition but still
performs very strongly.
- License the Harrods brand to appropriate third parties.
- Broaden the audience by using targeted catalogues to reach consumers
around the world.
- Collaborate with British creative culture. Think in scenes and change
them regularly so the store is constantly evolving like a piece of
- Before spending money on TV campaigns, make better use of shop
- Expand Harrods.com.
- Think local as well as international in terms of target audience.