Special Report: Harrods £1.5 billion summer sale
By FashionUnited
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It is that time of year where Harrods draw thousands of bargain hunters to its Knightsbridge store every year to sniff out seasonal offers on designer clothes, homeware and other bargains in the world-renowned Harrods Summer Sale. Shoppers arriving in the early hours and preparing for stretched queues are a way of life for the devotees but it is not for the faint-hearted. This is probably for the best too as this latest sale comes with a 1.5 billion price tag.
The news came as a surprise to the global community that after a successful reign of 25 years; Mohamed Al Fayed has sold Harrods for £1.5 billion to the Qatari royal family.
Ken Costa, chairman of Lazard International, the investment bank which advised the Fayed family trust on the deal, said in a statement: "After 25 years as Chairman of Harrods, Mohamed Al Fayed has decided to retire and to spend more time with his children and grand-children.”
"In reaching the decision to retire, he wished to ensure that the legacy and traditions that he has built up in Harrods would be continued, and that the team that he has built up would be encouraged to develop the foundations that he has laid."
"Qatar Holding will become only the fifth owner of Harrods since its creation, in 1840. Qatar Holding was specifically chosen by the Trust as they had both the vision and financial capacity to support the long term successful growth of Harrods," he added.
The sale of the luxury department store had been gathering speculation from different corners of the world for the past month but Mr Al Fayed vehemently denied the rumour, saying just a few weeks ago: ''People approach us from Kuwait, Saudi Arabia, Qatar. Fair enough. But I put two fingers up to them all. It is not for sale. This is not Marks & Spencer or Sainsbury. It is a special place that gives people pleasure. There is only one Mecca.’’
But this week it was confirmed that the owner of Fulham football club and of the Ritz Hotel has changed his mind in a deal signed in the early hours of 8 May 2010.
It would have been a very difficult decision for Al Fayed to make, says Katherine Miles, Consultant at Verdict Research, retail analysis and consultancy experts on UK and European retail markets, and former employee of Harrods: “But one that is going to be good for the future expansion of the business. Opportunities to expand in China, UAE and the USA where there are loyal customer bases who currently travel to the UK” are likely to be the next steps.
Harrods was established in 1834 in London, when founder Charles Henry Harrod set up a wholesale grocery with a special interest in tea. Harrod took over a small shop in Knightsbridge on the site of the current store in 1849. From modest beginnings; Harrod’s son Charles Digby built up the business into a thriving store and eventually expanded into the adjoining buildings by 1880. The store, surviving a fire in 1883 and debuting England’s first “moving staircase” in 1898, was bought by Al Fayed in 1985 for £615 million, sparking a decade-long feud, which was eventually reconciled in 1993, with Roland ‘Tiny’ Rowland, his fellow businessman.
This, however, would not be the only incident of Al Fayed courting controversy. He openly accused the British royal family in 2008 of ordering the deaths of his son Dodi and Princess Diana – claims which were roundly condemned and unfounded - and when Harrods lost its royal warrants that had been displayed on the store’s frontage, Al Fayed boldly replaced them with the Arab crest.
Despite the controversy, Al Fayed has set about establishing Harrods as an international attraction and the quintessential of retail opulence. It is claimed he has spent £400 million restoring Harrods, which Miles says had a very successful impact which reflected in trade figures: “Modernisation and development of the brand mix has helped meet the customer’s needs and expectations in store. Constantly improving the shopping environment, striving for the best retail experience and protecting the brand name has always been a key to the success of Harrods.”
On the store’s indomitable defiance of the recession, Miles observes that Al Fayed “invested throughout the recession while others cut spending and put expansion on hold.” A successful customer relationship management strategy saw incentives “retain a loyal and devoted customer base, especially in higher earners,” she adds.
Some of the most notable changes masterminded by Al Fayed include the outlandish Egyptian hall and escalator, the launch of an Urban Retreat spa along with a new cosmetics hall and a marble-walled accessories department. In 2006, he opened 102, a delicatessen and convenience store opposite the Knightsbridge flagship and there are Harrods concessions in four of Heathrow Airport’s terminals. Recently, the store’s 50,000-square-foot menswear department underwent a £9 million pound makeover.
Investment group Qatar Holding, which is owned by the Qatari royal family and holds a stake in Sainsbury’s and in Songbird Estates, may herald the brand “moving into different areas,” Miles predicts: “Online business [for instance] has been operating for 10 years but there is still a lot of work to do. New strategies and fresh ideas should mirror what they have in store. There is huge potential for a strong brand like Harrods with great relationships with many luxury brands to develop joint online ventures. Verdict predicts that e-commerce sales will increase by £42 billion to £62 billion over the next 10 years.”
The news came as a surprise to the global community that after a successful reign of 25 years; Mohamed Al Fayed has sold Harrods for £1.5 billion to the Qatari royal family.
Ken Costa, chairman of Lazard International, the investment bank which advised the Fayed family trust on the deal, said in a statement: "After 25 years as Chairman of Harrods, Mohamed Al Fayed has decided to retire and to spend more time with his children and grand-children.”
"In reaching the decision to retire, he wished to ensure that the legacy and traditions that he has built up in Harrods would be continued, and that the team that he has built up would be encouraged to develop the foundations that he has laid."
"Qatar Holding will become only the fifth owner of Harrods since its creation, in 1840. Qatar Holding was specifically chosen by the Trust as they had both the vision and financial capacity to support the long term successful growth of Harrods," he added.
The sale of the luxury department store had been gathering speculation from different corners of the world for the past month but Mr Al Fayed vehemently denied the rumour, saying just a few weeks ago: ''People approach us from Kuwait, Saudi Arabia, Qatar. Fair enough. But I put two fingers up to them all. It is not for sale. This is not Marks & Spencer or Sainsbury. It is a special place that gives people pleasure. There is only one Mecca.’’
But this week it was confirmed that the owner of Fulham football club and of the Ritz Hotel has changed his mind in a deal signed in the early hours of 8 May 2010.
It would have been a very difficult decision for Al Fayed to make, says Katherine Miles, Consultant at Verdict Research, retail analysis and consultancy experts on UK and European retail markets, and former employee of Harrods: “But one that is going to be good for the future expansion of the business. Opportunities to expand in China, UAE and the USA where there are loyal customer bases who currently travel to the UK” are likely to be the next steps.
Harrods was established in 1834 in London, when founder Charles Henry Harrod set up a wholesale grocery with a special interest in tea. Harrod took over a small shop in Knightsbridge on the site of the current store in 1849. From modest beginnings; Harrod’s son Charles Digby built up the business into a thriving store and eventually expanded into the adjoining buildings by 1880. The store, surviving a fire in 1883 and debuting England’s first “moving staircase” in 1898, was bought by Al Fayed in 1985 for £615 million, sparking a decade-long feud, which was eventually reconciled in 1993, with Roland ‘Tiny’ Rowland, his fellow businessman.
This, however, would not be the only incident of Al Fayed courting controversy. He openly accused the British royal family in 2008 of ordering the deaths of his son Dodi and Princess Diana – claims which were roundly condemned and unfounded - and when Harrods lost its royal warrants that had been displayed on the store’s frontage, Al Fayed boldly replaced them with the Arab crest.
Despite the controversy, Al Fayed has set about establishing Harrods as an international attraction and the quintessential of retail opulence. It is claimed he has spent £400 million restoring Harrods, which Miles says had a very successful impact which reflected in trade figures: “Modernisation and development of the brand mix has helped meet the customer’s needs and expectations in store. Constantly improving the shopping environment, striving for the best retail experience and protecting the brand name has always been a key to the success of Harrods.”
On the store’s indomitable defiance of the recession, Miles observes that Al Fayed “invested throughout the recession while others cut spending and put expansion on hold.” A successful customer relationship management strategy saw incentives “retain a loyal and devoted customer base, especially in higher earners,” she adds.
Some of the most notable changes masterminded by Al Fayed include the outlandish Egyptian hall and escalator, the launch of an Urban Retreat spa along with a new cosmetics hall and a marble-walled accessories department. In 2006, he opened 102, a delicatessen and convenience store opposite the Knightsbridge flagship and there are Harrods concessions in four of Heathrow Airport’s terminals. Recently, the store’s 50,000-square-foot menswear department underwent a £9 million pound makeover.
Investment group Qatar Holding, which is owned by the Qatari royal family and holds a stake in Sainsbury’s and in Songbird Estates, may herald the brand “moving into different areas,” Miles predicts: “Online business [for instance] has been operating for 10 years but there is still a lot of work to do. New strategies and fresh ideas should mirror what they have in store. There is huge potential for a strong brand like Harrods with great relationships with many luxury brands to develop joint online ventures. Verdict predicts that e-commerce sales will increase by £42 billion to £62 billion over the next 10 years.”
Miles concludes: “There is massive incentive to develop own branded products under the Harrods brand name – currently there is a Harrods offer of bags, teddy bears, cashmere etc, but there is big potential to develop successful ranges in the fashion and beauty areas which would be an opportunity to drive higher margins and in the future expand into other retail outlets under the Harrods brand".
Photo: Mohamed Al Fayed