Harrods needs more domestic shoppers and stronger e-tail says analyst
today Oct 16, 2019
The details of Harrods’ latest annual results were shared by the company’s managing director earlier this month, but now that the figures have been issued officially, one leading analyst has said that the company really needs to connect with more shoppers in the UK rather than just depending on tourists. And she also think it needs to do more to maximise sales from its tourist fans once they’ve returned home.
Harrods is a major tourist destination and a massive chunk of its sales go to these visitors from overseas. But Emily Salter, Retail Analyst at GlobalData, said the fact that its latest year saw only a slight rise in turnover to £868.5 million as gross transaction value (GTV) fell by £17.9m, was bad news and suggests it needs some strategy tweaks.
The figures came despite ongoing store investment to improve its unique luxury shopping experience, which it can normally rely on to drive strong growth. By contrast, one of its main competitors, Selfridges, recently reported 5.7% growth in GTV for the same period “as it innovates and invests in its stores to attract younger shoppers in particular,” Salter said.
She added: “As the positive impacts of increased tourism to the UK (due to the weak pound) have annualised out, Harrods must now work to attract domestic shoppers by introducing new brands and experiences.”
Harrods is investing heavily in its flagship Knightsbridge store, spending £64.1m in FY2018/19 and £55m in FY2017/18, with expectations that this spend will rise even more in the current financial year. It has already boosted its beauty offer with the opening of a 9,000 sq ft skincare emporium including exclusive brands and augmented reality mirrors. And it's also improving it's menswear spaces. but it's clear that more work needs to be done in order to engage more strongly with UK-based shoppers.
Salter also thinks that, given Harrods’ existing strength among international visitors, it needs more investment in its online proposition, “as rival Selfridges offers shoppers a delivery saver scheme including global shipping options, driving digital sales among international tourists after they have visited the store.”
This encourages shoppers to purchase more frequently than they might otherwise would, “and could be highly beneficial for Harrods as it has a small store estate, relying on its flagship Knightsbridge store and smaller travel locations,” she said.
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