Theatre and travel help drive healthy Harrods result
A healthy Harrods result has been driven by its successful travel format, in-store theatre and excellent brand mix.
The iconic luxury UK department store’s 2016 year results revealed a 3.6 per cent uplift in gross transaction volume to £1.4 billion for the year, while group turnover rose 2.6 per cent to £788.9 million and operating profit grew 43.2 per cent to £178.1 million.
The retailer acknowledged that trading conditions last year had been tough, but its Knightsbridge store’s destination status, the continuing success of its travel format, excellent mix of luxury brands and consistent focus on providing a theatrical in-store shopping experience assisted the iconic department store operator to weather a difficult trading environment.
While Harrods’ position among its department store counterparts remains unrivalled in terms of an aspirational brand image and heritage status, helping to draw in hordes of international tourists; it has been gradually branching out and seeking to modernise its proposition since it came under new leadership in 2010. The introduction of contemporary brands such as sportswear label Lululemon (which opened a 700 sqft shop-in-shop in Harrods in August), an overhaul of online operations, and installation of 4G in-store help enrich the shopper experience and make the brand accessible to a wider shopper base.
Harrods has traditionally been more relevant to an international shopper base than domestic, so such initiatives are imperative to increase its mix of domestic shoppers while keeping the brand relevant to a modern affluent shopper base – something which rivals Selfridges and Liberty do exceedingly well.
Harrods is in prime position to benefit from the rush of international tourists looking to capitalise upon the weak pound, which will help boost FY 2016/17 turnover; but with prices set to rise in 2017 especially in key categories such as jewellery and leather goods; the retailer will have to work harder to tempt shoppers.
*Nivindya Sharma is a senior analyst at Verdict Retail.