Harrods managing director Michael Ward has warned retailers that it is essential to invest in store environments during the downturn to give shoppers a reason to trade up.
Ward told Drapers that the iconic London Knightsbridge department store, which is understood to have achieved double-digit sales growth over the past two months, would continue to invest in its store and encourage its brands to upgrade their shop-in-shops to excite customers.
Ward said: “Over the past 18 months retailers have not invested in stores. We have to trade the customer up and trade their expectations up as well and you need to create an environment which is exciting in order to do that.”
Ward declined to comment on current trading, but said the retailer was “making a shekel”.
Harrods has continually evolved its store. It completed an overhaul of its menswear floor in November, giving brands “their own footprint with Harrods’ identity”, said Ward.
Harrods has also opened a denim boutique housing 26 brands, including new additions American Retro, Aiko and Bassike, with prices from £109 to £339. It will also open an 8,000 sq ft space devoted to menswear bridge brands in October.
“We’ve had an under-representation in menswear and we are redressing that balance,” said Ward.
He added that Harrods was doubling the space given to super-brands including Chanel and Louis Vuitton and would refurbish its Prada, Dior and Gucci areas as the super-brands continued to drive trade across all categories.
Meanwhile, fellow luxury department store Liberty reported positive EBITDA for the first time in a decade. EBITDA rose to £100,000 in the year to December 31, against a loss of £3.9m the year before.
Pre-tax losses after depreciation and interest narrowed from £7m in 2008 to £4.5m.
Full-year sales at the business - which is 68% owned by property and hotels group MWB - rose 20% to £59.6m. Sales at the flagship store on Great Marlborough Street grew 18% to £37.3m, a 20% like-for-like hike. Liberty’s fabric business had a record year, with sales soaring 23% to £21.5m.