Harrods
MD defines the luxury experience

Michael Ward, Managing Director of Harrods and Chairman of the Walpole Group, gave a captivating speech to staff and students of Regent’s University London on Thursday, on the Harrods luxury experience – what sets Harrods apart from all others - and the challenge of marketing to millennials.

A packed out Herringham Hall sat enthralled by Ward’s speech, which focused on Harrods being “masters of curation”, and creating an experience and memories for their customers, while telling a story that’s relevant to today’s audience, which will last a lifetime.

“Harrods is broadly a million square feet of retail, and when I joined we took the decision that we had one objective – and that was to service the top .1% of the world’s wealth. So what we said we were going to do, is exclude 99.99% of the world from our potential purchases.

“A lot of people thought we were slightly foolish in doing that, but what it did, is it gave all of our staff a total beacon that it had to be excellence. It had to be the most amazing product, it had to be unique. Although people below that threshold shop with us, it was a great rallying call for all of our staff.

“To put that into perspective, our little shop in Knightsbridge, turns over just over £2 billion pounds per annum. If you put that into perspective, it’s more than most department store chains. How have we done it? What we have done, is make sure we have total authority in a number of key categories.

“Think about shopping journeys – if you’re fortunate enough to be given £250,000 to go and buy some jewellery, what are your alternatives? You can go to Bond Street – and when you go down Bond Street, the first thing you do is ring a bell. Then you’ll be confronted by this 600 pound gorilla, who will deign whether or not you are capable of going in his store.

“And then you walk through, and because of all this barricade and it’s a premium area, the shop assistants will not have seen a customer for two days, so they will pounce on you. And actually all you wanted to do, was wander in there, and see if they had some earrings, or a necklace, or a bracelet. They may find some earrings, but you want choice. So you go out of that boutique, and you go in all of the others. And it’s a horrible experience.

“If you come to Harrods, you can walk into Bulgari and have a look. Just wander in with your boyfriend or girlfriend. You can go then into Van Cleef and Arpels, Harry Winston, Graf – you can go into every one of them. And then at the end of the day, you can turn round to us say, “I really liked that tutti frutti in Bulgari, but that little bracelet in Harry Winston was gorgeous and those Cartier earrings were fantastic. And we’ll put them all together for you, so you can try them on.

“It’s going back to the old fashioned principle of what a department store was built for – it was about giving you choice, about giving you exemplary service. And that’s the other part that we push on – we fail occasionally, but it’s about giving that service. The one on one relationship – personality, building relationships – for us, is absolutely fundamental to success.

Simply selling a product, says Ward, is not enough. In his 13 years in post, Harrods has been transformed, section by section, to be one of the most successful department stores in the world. Experience trumps all, and today’s product must be relevant to its consumer.

“If I go back ten years ago, when I started in this industry, product was enough. It was beautiful. Now, it’s suddenly changed. It’s about moving from selling product, to being the absolute curators of luxury. We have to bring the product to life for you.

“Everything we have done as part of that process, is to elevate to an experience.

“The Harrods cigar lounge contains cedar keeps, in a room which has temperature controlled humidity. On your mobile phone, you can access it from anywhere in the world to ensure that Harrods is looking after those precious babies, for someone who is passionate about their cigars. The average person keeps about a quarter of a million worth of cigars in their keep.

“Not content with that, Harrods wanted an area where people could actually sit down and enjoy their cigars, so we built a cigar lounge. The people that we have shopping with us don’t want to go around smelling afterwards. So we went to Switzerland, and we got a company to develop a technology. That technology produces layers of air that move upwards in absolute unison. It means, that you can smoke a cigar, and it will never touch your clothes. That’s the attention to detail in a cigar lounge.

“We no longer stock whiskey by brand. We stock it by flavour characteristics. What we talk people through now – that’s their favourite whiskey, but what they see around it are three or four others. They trust us that those flavour characteristics will carry forward.

"The old thing of good, better, best for a retailer, you can actually put on a shelf, but with the same flavour characteristics. We see these people treating themselves to this slightly more expensive product which they can then sample and if we’ve done our job right, then they will be really delighted because those flavour characteristics will be identical to the thing that they love. And we’ll all of a sudden start to build a different relationship with our customers.

“The relationship with the customer must be complete, and for me, it must form memories. Because if I can get you to take a memory away with my product, I’ve won you for life.

“You might think, ‘we’ll you’re selling clothes and stuff, how do you do that?’.

“My daughter was married recently. Two years ago I created something called Salon De Parfums, which sells the most exquisite and extraordinary fragrances you can find anywhere in the world. I booked my daughter in for two hours. In two hours, they created with her, the perfect scent for her. Going through all of the notes, all of the nuances to get the length of the fragrance, and that was her wedding fragrance.

“It will never be created again in the world. Whenever she wears it, she thinks about her wedding day. And that’s about creating a memory. You think that you can’t do that in many categories – I can absolutely assure you that in every category, you can start to build a relationship which goes beyond transaction, and the luxury industry is amazing at doing it. Once we do that, it gives us customers for life.

“We do DNA testing. The results, if you get in early enough, will allow you to understand what will cause the defects in your face in the feature. We can create creams that will to ameliorate those issues over time. Using the top of science to be able to help people through that journey, and I can assure you in forty years’ time, that relationship we’ve formed with that lady will be absolutely unbelievable.

“In everything we do now, the experience transcends it – across all of the touch points.”

On the future of luxury, and the role of online versus physical department store, Ward had a lot to say.

“A lot of people have asked, what is the future of luxury? I remember a number of years ago when we started to see the financial meltdown, and everyone said luxury is finished.

“Luxury will never be finished, because the creativity of some of those individuals is amazing, and that creativity drives demand and influence. The one thing that we benefit from in the UK, is our ability to create. If you look at our fashion colleges – they create the best designers for all the best fashion houses.

“So when people say, do I believe luxury has ended – no I don’t.

“I really believe there is a role for both the physical department store and the dot com business. Don’t ever down play that experience as being part of it – how we make you feel good. I watch ladies who, two years ago, ordered their Birkin bag.

“The last person who touched that bag was the artisan craftsman in France, who made the bag. They’re unwrapping that orange envelope in front of all these women, and the only thing those women want to be is you receiving that amazing bag. Creating that experience online is physically impossible. Yes the internet will be there…but being experiential as a building, I think compensates for us.”

And on the future of the high street?

“I think the future of the Debenhams, the John Lewis, the House of Fraser – they have no chance in life, because it’s a commodity product, being sold in a commodity environment. I can get that product online with no experience, and therefore that’s where I think the problem lies. It’s in the high street, and the less experiential businesses.”

Gill Stark, Assistant Dean and Head of the School of Creative and Liberal Arts, was thrilled that Michael Ward was able to share some of his precious time with Regent’s students.

“I am delighted that students reported that they found Michael’s talk inspirational. It was a fabulous opportunity for colleagues and students to hear about the approach that Harrods takes to luxury retailing under Michael’s leadership. We are grateful to Michael for generously spending so much time with us today.”