In a Digital World, Harrods Bets on Tradition

Harrods isn’t embarrassed about being a bricks-and-mortar player in a digital world.

So said the luxury department store’s managing director, Michael Ward, on stage at the BoF China Summit last week in  Shanghai.

Far from facing the death of retail, Ward claims the “Palace of Knightsbridge” is insulated from the woes facing high street brick-and-mortar counterparts around the globe because of its focus on tradition and experience — factors that are difficult to replicate digitally.

“Everything we do now is about experiential luxury; it’s about engaging the customer in that product and journey,” Ward explained.

“[In] the bakery, you can watch the sourdough bakers and you can put your name on a loaf of bread. When you go into the coffee and tea room, we have a tea tailor who can create for you the ultimate tea. The power of it is extraordinary.”

It is this sense of experience and tradition that attracts consumers from around the world, and especially China, to Harrods. In 2017, Chinese consumers became Harrods’ top customers, outspending their British counterparts for the first time.

According to Ward, the department store hasn’t done anything to particularly cater to this Chinese consumer in-store, aside from the basics. At a store the size of Harrods, this means employing more than 200 Mandarin speaking staff (and more in training) and being quick to adapt to Chinese payment options, which now include UnionPay, as well as digital payment systems Alipay and WeChat Pay.

“What they are coming for is the quintessentially British experience of Harrods,” he said.

“If you look at what we do best in the UK, it’s exporting soft power. The power of Downton Abbey or The Crown in America or China is more powerful than what our government can do. So … [by] being modern, but still not being ashamed of being a traditional company, it’s hugely important.”

Rather than change the essence of what they do as a department store, Ward claims the key to continued relevance in a new and digital-first age is to look at categories individually and how they can be updated while still remaining imbued with brand values and DNA. An example of this is the current renovation and expansion of the menswear floor, which will eventually span 150,000 square feet.

If Ward’s tenure at Harrods says anything, it is that the company isn’t one to shy away from change. Under his leadership, Harrods experienced a smooth transition when it was sold in 2010 for an estimated £1.5 billion to new owners Qatar Holdings, and invested in new departments including Super Brands and Shoe Heaven.

“Complacency, to us, is the worst evil. So we’re trying to constantly change,” Ward said.

Although Harrods’ digital identity is still a work in progress, the retailer does have ambitions to utilise new technologies to bring more of their in-store experiences to life online. As for international expansion plans, seeing a Harrods store somewhere like China is not out of the question for Ward.

“We would never say never on a market,” he said. And China isn’t just any market for Harrods — according to the company’s bold claim, one in every £5 spent by Chinese visitors to London is cashed in at one of its tills.

“I think the key is, if we ever did it, we would have to replicate the absolute splendour of what we do. It would have to have authority in all of our categories. It wouldn’t be like other stores who’ve taken away their souls when they’ve gone abroad. If it’s Harrods, it has to have its soul.”