Harrods has begun the biggest redevelopment in the department store’s 180-year history to increase its appeal to wealthy overseas shoppers flocking to Britain to exploit the weak pound.
The boss of Harrods, which is owned by Qatar’s sovereign wealth fund, said £200m will be spent redeveloping all of the shop’s one million sq ft of retail space over the next three years. The famous exterior with its 12,000 light bulbs and green awnings will be untouched.
Michael Ward, who has been running Harrods for more than decade, said the refurbishment will be the most ambitious since the Knightsbridge store was opened by Charles Henry Harrold in 1849.
Work has already begun on the redevelopment of its grade II-listed food halls, and its fine watch room and beauty halls will be increased in size. The watch room – where a Hublot spirit of big bang sapphire chronograph watch is on sale for £66,000 and an 18 karat rose gold Audemars Piguet’s Royal Oak Offshore watch is on sale for £58,300 – will be expanded into the basement via a new marble staircase.
Ward said much of the refurbishment work is being carried out to tailor the store to customers from China and south-east Asia. “Our Hong Kong and Chinese customers are extremely important to Harrods so are considered part of our redevelopment plans,” he said. “For us, the future is in the east and we have been focusing on that for a number of years.”
He said Chinese customers are Harrods’ second-highest spenders after British shoppers, and research showed that one in every £5 that Chinese visitors spend in London is spent at Harrods.
“Many of our Hong Kong customers have second homes in London and may have children at boarding schools in the UK,” Ward said in an interview with the South China Morning Post. “They spend a significant amount of time in London and at Harrods so we don’t see them as tourists, even if they do get to benefit from tax-free shopping.”
Last month Harrods reported its eighth consecutive year of rising profits, recording a 39% increase in pre-tax profit to £233m. Annual sales broke through the £2bn mark for the first time ever, and the company noted a “significant boost in trade after the weakening of the British currency”.
The company paid out a £110m dividend to its owner Qatar Holding, the strategic investment division of the Qatar Investment Authority. The sovereign wealth fund bought Harrods from Mohamed Al Fayed for £1.2bn in 2010.
Official figures show the number of Chinese visitors to the UK in the first six months of the year rose by 47% to 115,000. These visitors spent a record £231m in the first half of the year, a 54% increase according to the Office for National Statistics during this period – up 54% according to the ONS.
Ward said that the department store, which has 330 different departments, is considering changes to its signage to make it easier for Chinese customers to navigate the shop. Harrods will also pump money into its boosting its presence on China’s most popular social media platforms, Weibo and WeChat.
Earlier this year, Harrods opened a branch of its famous tearoom in the British House in Beijing. The British House, which showcases more than 100 British brands, was set up by Highgrove China the exclusive Chinese agent for the Prince of Wales’ social enterprises and a supporter of his charities.