Harrods Sold to Royal Family of Qatar
After denying for years that he planned to sell the iconic
Harrods department store, Mohamed al-Fayed has done just that. Last week, Harrods
announced it had to been sold to an investment group, Qatar Holding, representing
the royal family of Qatar, for £1.5 ($2.3) billion.
As for his change
of heart, the 81-year-old Mr. Fayed said he had decided that the time was right
to spend more time with his children and grandchildren. He will continue as
honorary chairman of Harrods.
According to a report in London’s The Sunday
Times, Mr. Fayed had
called off negotiations in the past month after Qatar Holding had balked at
the £2
billion he was reportedly asking for the business. He was finally persuaded to
accept the lower offer after the new owners agreed "to underwrite the long-term
growth of Harrods and protect the pay and pensions of its 5,000 staff."
Ken
Costa, chairman of asset managers Lazard International, who advised the Al
Fayed family on the sale, told BBC News, "In reaching the decision
to retire, [Mr. Fayed] 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 has given no official indication of any major changes planned for Harrods
but said it would bring in advisers as it created a "road-map" for
the building the business. A report by the Financial Times suggests
that possible changes would be revamping the Knightsbridge store to increase
the amount of selling space. Other possibilities include building up the chain’s
website to expand its business online and building a second location in Shanghai
to serve Southeast Asia.
Sheikh Hamad bin Jassim bin Jabr Al-Thani, prime minister
of Qatar and chairman of Qatar Holding, said, "I know it’s important
not only for the British people but for tourism and London and Britain. I can
ensure that Qatar Holding will do their best to upgrade this monument to make
it even greater and better for the tourism and for the British people."
Qatar
Holding is buying an upscale icon that has managed to prosper even in the face
of a recession that has hit its customers from the U.K. and abroad. Harrods,
with its All Things for All People, Everywhere motto, attracts roughly 15 million
customers every year.
Discussion Questions: If you were buying Harrods, what would you do
with the iconic department store?
First, I would have a consultant review the operation from “cradle to grave.” Observe what they do well, what they do not so well, etc. Then, I would build on the strengths of the name and brand. I would enhance technology in the store, marketing, supply chain, and customer service to improve the efficiency of the entire operation.
Harrods, as a glorious free-standing single enterprise, is the epitome of U.K. business culture and “deserves” to be led by a British subject or a sound British group of high integrity.
Thus, if I would have purchased Harrods I would not expand the innovative and unique Harrods to other geographies–“The King of England should rule from one throne” and I would do something unusual in today’s world. I’d seek out successful British business leaders with appropriate chauvinistic pride and high integrity and attempt to return this icon to “John Bull”…but being a well-intentioned capitalist I would retain a large minority interest.
I think Gene’s on to something. I’d use the new owners as a fresh source of funding, then bring together noted British business leaders to brainstorm the future of the brand. The potential here is huge…as long as its British identity remains intact.
Two words: Global Brand.
Consumers the world over recognize the Harrod’s name. The big opportunity is to give it real meaning the world over. I would dig into the the core value it brings and the reasons it is world renowned and use that as a baseline for relevancy around the globe.
What is it that compels buyers/owners of iconic retail brands to fall into the trap of “infinite markets”?
The people who shop at Harrod’s can afford to fly to London. It’s an “outing” for them. And a fun one at that. The company is completely recession-proof. While it seems attractive to expand to places like Dubai or Shanghai, I submit its iconic status is better served by being in ONE place. As much as we might think New York is the “greatest city in the world,” London has the broadest reach.
I have spoken with major executives at Harrods–during the height of the recession. Business was doing quite well. I would recommend leaving it as is.
I love Paula’s recognition that Harrods’ customers can afford to come to Mohammed (when he owned it), and that he or his successors do not need to go to them. Harrods products are already available in airport gift shops – I don’t think they need travel beyond these shores unless customers carry them.
As for re-vamping the Knightsbridge store, another iconic British store, Fortnum & Mason, had a complete re-design a few years ago and is spectacular. Much more enticing than it was before when it had got just a little bit too old-fashioned and entrenched for its own good.
The first question I would ask is what percent of the business is British customers and what percent is tourist? Then, what are the tourists buying? I would build smaller stores around the world based on the non-tourist business. And I would create online sales with the same level of service customers enjoy today.
Harrods is an unrivaled British institution. Most of its business is from foreign tourists so it needs to stay relevant and its product mix accessible both in the store and online for those returning home and wanted to order additional merchandise. Al Fayed has invested billions in its infrastructure but its online presence and social media strategy could do with a facelift.
Harrods has a strong brand equity but that shouldn’t mask the opportunity to review all facets of its business–technology, merchandising, supply chain etc. They should evaluate the equity of the Harrods brand and explore opportunities for selling it in other markets.
As a Brit, I used to work in International Marketing for the food group at Harrods, London in the late ’80s/early ’90s. Whenever a new brand was launched, Harrods wanted it, for an exclusive period at whatever cost. I saw Ben & Jerry’s there in 1989 years before it appeared anywhere else in the U.K. The Food Department is unrivaled anywhere in the world. As the jewel in the Harrods Crown, that should always be a good starting point for any review.
Get on the offense! Define the target audience and pursue them aggressively in every way. Leverage the tremendous brand but don’t rest. Think globally.
Mostly I’m aware of what I WOULDN’T do with it, as in I wouldn’t change the name of it (hint, hint).
Anyway, back on topic, IIRC Harrod’s at one time had a branch in Buenos Aires, so the idea isn’t exactly novel (not to mention competitor Selfridges recent foray into branches) but whether a branch in Shanghai is a logical first move, I’m not so sure.