Industry insiders have urged Qatar Holding to stay true to the roots of Mohamed Al Fayed’s Harrods formula for success after the investment vehicle bought the business for £1.5bn last week.
Although Al Fayed will stay on as honorary chairman, not believed to be a hands-on position, fashion bosses said the store would miss his “obsessive” attention to detail and control over the Harrods brand.
However, they added that managing director Michael Ward was a safe pair of hands to continue running the business.
Ward has overseen several strong years of trading at the retailer, which defied the recession to post a 9% sales rise to £751.7m in the year to January 31, 2009.
The Qataris bought the business via Qatar Holding, the investment arm of the state-owned investment fund last weekend.
One source close to the department store said: “Al Fayed was all over that business and was a great retailer. It won’t be easy to replace what he brought to the store - that obsessiveness and understanding.”
He added: “Michael Ward is quite genuinely a smart guy, though, and Harrods does have a good team in place with people such as Marigay [McKee, fashion and beauty director]. They are all pretty upset that he has sold the business as, contrary to what circulates in the market, most of the management and staff at Harrods like Al Fayed and really respect him.”
A former Harrods employee said: “A lot of what Harrods is today is because of Al Fayed’s influence and creativity. But there is probably more you can do with it on a global scale.”
Speculation emerged this week that the Qataris plan to launch a Harrods in Shanghai, while industry watchers said the business could leverage its global brand reach with a more sophisticated web proposition.
The source close to the business said: “It won’t be straightforward to take Harrods to China but there is loads of global growth potential.”
A second source said: “Mohamed always felt there should be only one Harrods, and that the Knightsbridge store was what it was all about. He didn’t want to dilute the brand or his power over it by taking it global. But it’s easy to envisage a few more Harrods stores around the world.”
Speaking to Drapers, Ward said: “The [Qataris] have bought into a very successful and growing business during a very difficult time [the recession].
“It’s not a trophy asset. Where there are commercial opportunities we will explore them.”
Harrods: Al Fayed’s dream
1849: Charles Henry Harrod, a tea merchant, opens a grocery store in Knightsbridge
1889: Company floats on the London Stock Exchange
1959: Bought by House of Fraser
1985: Al Fayed takes control of House of Fraser in a £615m deal
1987: Al Fayed spends £300m on five-year refurbishment
1994: House of Fraser goes public but Al Fayed retains ownership of Harrods
2009: Record financial year - Harrods posts 9% sales rise to £751.7m. Pre-tax profits nudge up to £56.2m
2010: Qatar Holding buys Harrods for a reported £1.5bn
Big money in Qatar
The wealthy Gulf state, led by the Al-Thani family, founded the Qatar Investment Authority (QIA) in 2005 to invest in businesses outside the oil and gas markets.
In retail, the Qataris are best known for their failed £10bn bid to take over Sainsbury’s in 2007. The QIA owns a 26% stake in the supermarket chain. In 2008 it bought into Barclays, which let the bank survive the credit crisis without government support.