How Harrods Stays British While Bending Backwards for Chinese Shoppers

    The department store has launched a three-year renovation project aimed at improving its retail experience for its increasingly discerning customers.
    Harrods maintains a presence on WeChat where they share promotions and videos of events at its London location. Its recent Dolce&Gabbana fashion show, broadcasted on WeChat and Weibo, is a successful example of connecting with Chinese millennial customers. Photo courtesy: Jessica Rapp
    Jessica RappAuthor
      Published   in Finance

    Consumers are seeing it from the likes of Shanghai’s new mega-sized Starbucks and Tokyo’s iconic Dover Street Market—it’s called “destination retailing” and now, London’s luxury shopping mecca, Harrods, is making adaptations to its Knightsbridge store to capitalize on the trend.

    The brand recently announced it was undergoing a £200 million, three-year renovation project across its 1 million sq. ft. space, the first of its kind in its 180-year history. In part, the upcoming changes were prompted by an overwhelming need to cater to one of its top clients, affluent Chinese consumers, who surpassed British nationals in terms of spending in the department store.

    Harrods Managing Director Michael Ward said that to cater to these Chinese shoppers and its overall “discerning modern luxury customer,” the store is responding to customer demands for unique experiences, revamping its floor plan to “offer unparalleled retail theater opportunities in-store.”

    “It will see the redevelopment of entire departments and large-scale improvements to make the store more navigable and customer-centric, with investment across a number of divisions,” Ward said. These include a fine watch room due to be complete next spring, a floor entirely dedicated to menswear and sports, the expansion of Harrods beauty offerings across two floors, and changes in the home department.

    While Ward said these changes were designed to accommodate their global customer, he said the Chinese shopper is becoming increasingly “discerning”, especially in the fine watch and jewelry departments. To cater to Chinese customers, the department store has more than 200 Mandarin speaking staff and more in training, and they accommodate Chinese payment service Alipay for shoppers. Tencent’s WeChat Pay will also soon be introduced to the store.

    While this new evolution of Harrods will involve many transformations, the brand is still more focused than ever on promoting itself as an essential part of a famous UK tourist destination. Chinese tourism to Britain experienced an uptick following the Brexit referendum as shoppers sought to benefit from the declining value of the pound. In the first six months of this year, Chinese spent more than £231 million in the UK, according to VisitBritain.

    “We do not make large adaptations specifically aimed at Chinese customers, because we want to celebrate our brand identity and Britishness,” Ward said. “If you come to London, you don’t want to see something that’s from your country: you want to celebrate everything that’s British, and we think that’s important.”

    Cultivating this destination-centric experience for Chinese tourists in particular doesn’t only happen in the London store itself, but extends into China. Although Harrods has no plans to expand its brick and mortar store beyond Knightsbridge (“we believe ‘there is only one Harrods’ and that exclusivity continues to make us highly coveted all over the world,” Ward says), Harrods did open a tearoom at The British House in Beijing earlier this fall, with the aim to bring a British experience to potential new customers and connect with current ones in its target market. The British House, located near Tiananmen Square, also features more than 100 luxury lifestyle and fashion brands from the United Kingdom.

    Additionally, Harrods maintains a presence on WeChat where they share promotions and videos of events at its London location. Ward cites its recent Dolceamp;Gabbana fashion show, broadcasted on its WeChat and Weibo platforms, as a particularly successful example, especially in connecting with its Chinese millennial customers.

    Ward said Harrods is also looking at expanding its print magazine to mainland China next year after already pivoting to shoppers in Asia, specifically making it available to consumers in Hong Kong, Singapore, Thailand and Malaysia. The brand is considering an online format for the mainland Chinese expansion of Harrods Magazine Asia to accommodate the increasingly digitally savvy consumer.

    Creating a connection with the customer comes down to what Ward calls a “real omnichannel experience.”

    “It’s all about having personal relationships with the store,” he said. “There is no length we won’t go to for our customers—from securing the most coveted products from leading luxury brands to creating inspiring concepts in-store and making sure our customers have whatever their heart desires, no matter where they are in the world.”

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