May 7, 2013
Harrods in metamorphosis under Qatari ownership
May 7, 2013
It is just three years since the investment fund Qatar Holding, a subsidiary of Qatar Investment Authority, paid $1.7 billion on behalf of Mohamed Al Fayed to purchase the famous London department store Harrods, founded in 1840.
After the acquisition, the new owners said they wanted to make Harrods a global company with the goal to define luxury in retail and entertainment,” recalls Kate Ormrod, analyst at Verdict, a British-based retail analysis firm. The investment fund does not skimp on resources. In 2011-2012, it injected some 128 million euros in the department store as opposed to the 38 million euros it had spent a year earlier. Such a rate of investment is expected to continue in 2012 and has helped finance a compendium of projects: Harrods, which represents 5.1% of department stores sales in the UK (Source: Mintel), opened a new distribution center in Newbury to support sales growth, which totaled 771 million euros in 2011 (+11%) with taxable profits of 148 million euros (+15%). A Harrods opened in Terminal 5 at Heathrow Airport, and the store in Terminal 3 was renovated along with a relaunch of its website. The group has also stepped up its concessions openings: a new men’s shoe department, a dedicated watch store (Watches Emporium), the first-ever Tom Ford ready-to-wear boutique and the creation of a huge children’s toy store last July called Toy Kingdom. “There has also been an influx of new brands, especially in men’s and women’s fashion [Carven, Alexander Wang, editor's note],” says Kate Ormrod. “The product offering was expanded to include new designer brands but also mid-range brands to allow the department store to attract less affluent customers." The men’s, accessories and children’s departments were reorganized while sportswear was expanded.
Harrods is also sending hints to its international customers by allowing the use of UnionPay cards and internationalizing its store signage. Pure Qatari touches are also being quietly developed. On the second floor, the In-Q café offers beverages and the chance to purchase items and clothing symbolizing the culture of the emirate. The opening of an agency for the national airline Qatar Airways is planned for the coming weeks. New international projects are being considered. In July 2012, Harrods announced its plans to create a hotel chain under the Harrods brand in Kuala Lumpur, New York, Paris and London. This summer the department store is also planning to open a pop-up shop in Porto Cervo in Sardinia. But if the projects are flowing, management under the leadership of CEO Michael Ward remains stable. Harrods recruited John Edgar from Selfridges to be its new chief financial officer, and Sarah Brown, wife of former Prime Minister Gordon Brown to the position of non-executive director in charge of governance. “British brands seem to attract foreign investors, but these investors do not seem to want to invest heavily in these companies and prefer to let the existing management decide on the future directions,” summed up Kate Ormrod.
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