Harrods still hitting the spot with Chinese luxe shoppers says MD

Harrods MD Michael Ward remains upbeat about the luxury department store’s future sales to Chinese customers, despite much of UK luxury retail bemoaning the removal of tax-free shopping for tourists and urging its return.

Of course, Harrods has suffered from the end of the VAT-free perk and wants it back too. But as far as China is concerned, Ward said the retailer is hitting the spot and connecting with the most affluent shoppers.

In a Bloomberg TV interview, he said: “For us the luxury sector continues to grow and our focus has always been on the top 0.1% of the world’s wealth. Whatever happens in the world is that the rich get richer and therefore we are right in the sector that’s still showing solid economic growth. 

“People are investing in fine jewellery, in watches, they particularly want the finest and most exclusive products and Harrods is always the place to go for that.”

He said China represented about 4% of its sales last year but is growing at around 7%, “and we expect that to accelerate as we go through the whole of 2024”.

And while he doubts whether overall Chinese luxury spending in the West will ever get back to pre-pandemic levels, he thinks the firm’s focus on a certain type of customer will be key for it to maximise its own sales among this important spending group.

“One thing we’ve never done as Harrods is to focus on the mass tourist customer. We always built relationships with people who have great wealth and they continue to come with us,” he explained. “We’re seeing a gradual build back of that ultra-high-net-worth [customer] who’s travelling to London.

“We’re very bullish about that [for China], but that’s because we’ve built special relationships with those customers. Finding product that they can’t find anywhere else will draw them to Harrods and it will draw them to London.”

So why doesn’t he expect Chinese luxury spending abroad to bounce back to previous levels? “China has developed an infrastructure, it’s developed a tax-free area within its country, so we’re not going to see that come back,” he said. “Areas like Singapore and Japan have benefited from visa restrictions and a softening of the value of the currency, which has given greater value to the Chinese customer. So we’ll start to see Asia grow”.

And that’s one of the reasons why the company has opened its private members’ club in Shanghai. Ward said the aim is “to make sure we keep close to our customers. China is an important sector to us… This club is something special. It’s the first one we’ve done, we really want to see how it grows and develops. 

“The initial stages have been very successful. There’s been a good take up in memberships. We’re looking to take up to 250 members and we’re gradually getting there. But we’re being very selective. 

“Britons are brilliant at curating clubs. The majority of [members] are already at our customers so we have long-standing relationships with them.”