Harrods’ CEO, Michael Ward, maintains a strong belief in the luxury department store’s prospects, even amidst an economic downturn. Ward asserts that “the rich get richer in a recession,” expressing confidence in the resilience of high-end consumers. In an interview with the Financial Times, he further emphasizes the need for the reinstatement of tax-free shopping for tourists, viewing the government’s refusal as a critical threat to Harrods’ existence.
China’s affluent tourists, in particular, have become a cause for concern for Ward. While France has been discussed as a possible European destination for Chinese travelers in the latter half of the year, he worries that London, historically known as the capital of luxury, may risk losing its status.
Despite the substantial challenges posed by the ongoing Covid-19 pandemic and the absence of tourists during lockdowns, Ward reveals that Harrods is currently “trading ahead of 2019 levels.” He highlights the store’s role as a “shop window to the world” and stresses the importance of refocusing efforts toward local customers. The majority of spending now comes from British shoppers, a remarkable shift from 2017 when Chinese nationals held the title of Harrods’ biggest spenders.
Ward’s assertion about the rich benefiting from a recession finds support in a recent report from Bain & Co and Altagamma. The report predicts robust growth of “at least” 3-8% in the luxury goods sector, valued at €353 billion, despite increasing inflation and expenses.
This positive outlook indicates that Harrods, as a leading luxury retailer, is well-positioned to thrive even in challenging economic conditions. However, the reinstatement of tax-free shopping for tourists remains crucial for the store’s sustained success, as it plays a significant role in attracting international customers. Harrods’ ability to adapt to evolving consumer behaviors and maintain its allure as a global luxury destination will be vital for its future prosperity.
Useful links:
1. Financial Times: Harrods CEO Calls for Reinstatement of Tax-Free Shopping
2. Bain & Co and Altagamma Report: Luxury Goods Market Outlook
