Even Harrods Has to Adapt to the Age of Coronavirus
(Bloomberg) -- Harrods had always largely dismissed the idea of branching out from its seven-floor luxury shopping emporium in the exclusive Knightsbridge district of London where it’s been based for 170 years.
Next month, as the U.K. retail industry inches its way back to business in the age of coronavirus, a mall a couple of miles away in a less glamorous part of the city will get a new tenant.
Harrods will showcase discounted stock during the iconic British department store’s summer sale in a space that can help cope with Covid-19 social distancing. Rather than uniformed doormen opening taxi doors, there’s a massive, multilevel parking garage and a train station.
From the glitz of Harrods down to your average strip-mall chain, retailers are adapting to get cash registers busy again as Britain opens up a corner of the economy it depends on more than other large European countries.
The pandemic has taken a particularly heavy toll on the proverbial nation of shopkeepers. The industry provides jobs for more than 3 million people with almost 400 billion pounds ($504 billion) of sales in 2019 equivalent to about 5% of gross domestic product. Consumer spending as a proportion of the economy is higher than in France and Germany, including for clothing and footwear.
Essential retailers, such as supermarkets, pharmacies, hardware and pet stores, have stayed open and enjoyed rising sales, while all other shops had to close their doors in March as on much of the continent.
Companies will need to “recalibrate their brains” to determine new operational models, said Ewan Venters, chief executive officer of Fortnum & Mason, another high-end British food and homewares retailer. “Ultimately in business it is all about providing confidence,” he said. “If confidence is back then consumption will increase, which will lead to positive sales.”
Fortnum’s food hall on London’s Piccadilly has already opened back up after implementing safety measures. They include changing the layout of store displays, installing plexiglass screens at pay points, training staff on how to manage social distancing and offering them visors and face masks.
Even before the pandemic, retailers were struggling with high rents and property taxes and a structural shift in consumer behavior. British shoppers buy more of their goods online than anywhere else in Europe.
Debenhams Plc, a department store chain, is in administration—a type of U.K. insolvency process—and fashion retailer French Connection Plc has warned it could run out of money in a few months without a cash injection or a significant improvement in sales. Most retailers have drawn down their revolving credit facilities and taken advantage of government support such as a staff furlough program.
Many European countries have already allowed most retailers to reopen. Department stores in Paris did it in steps, with Le Bon Marche on the Left Bank welcoming shoppers on May 11 and Printemps Haussmann and Galeries Lafayette eventually following by the end of the month.
The U.K. government is only now cautiously beginning to ease the lockdown restrictions after the country recorded more deaths than anywhere else in Europe. Since the start of this week, car showrooms and outdoor retailers in England, such as garden centers, have reopened and the rest can do so on June 15.
In addition to setting strict hygiene guidelines, many European countries have set a fixed number of customers allowed per square meter of retail space, and the U.K. is expected to follow suit.
Primark, Britain’s largest clothing chain, will put staff on doors with “clickers” to count customers entering and leaving. There will also be “sneeze screens” at checkouts, new systems to line up for payment, and “marshals” who can intervene if areas are becoming too crowded.
Associated British Foods Plc, which owns Primark, has already opened 111 of its stores in nine European countries, including Germany, France, Spain and Italy, using these measures, said John Bason, its finance director.
Flexibility from retailers and governments will be key, according to Bason. He cited Austria as an example, which increased the number of people allowed per square meter. “We are all having to find our way in this,” he said.
Balancing safety requirements with the traditional shopping experience is certainly the most significant challenge for Harrods. It has small outlets in department stores worldwide and some airports and a soon-to-be started beauty store spin-off, yet its business is focused firmly on about one million square feet of space in London’s Knightsbridge.
Owned by Qatar’s sovereign wealth fund for the past decade, the store is famed for selling everything and anything, from tea to artwork and furniture. At one stage, it even had an exotic pet department that sold “Gertie,” a pet elephant to Ronald Reagan before he became president.
Next month, though, Harrods will open a new standalone store in the Westfield shopping center in Shepherd’s Bush, a part of west London that is still classified as one of the capital’s most deprived locations. The aim is to take some of the pressure off its historic hub.
As one of the world’s largest shops and a major tourist attraction, Harrods typically attracts 15 million shoppers a year to a building that originally was designed for 19th century standards.
The building, with its terracotta exterior and grand dome, was built in 1883 and has multiple entry points and a warren of underground tunnels. There are 16 escalators within the buildings, multiple stairwells, and—in normal times—a bustling food hall, restaurants, and many interactive experiences, particularly in its toy department. The building also has protected status, meaning any significant alterations cannot happen without approval from the local authority.
Harrods said a senior leadership team has been meeting daily to come up with a plan to create designated entry and exit points and install signage, sneeze screens, and “sophisticated and independent software to monitor footfall” to ensure strict limited capacity is maintained across the store.
Staff have been trained on how to manage social distancing within the store and sanitization stations have been set up throughout the building. Its cafes, wellness clinic and beauty salons will remain closed for the time being. It’s also not clear when the many personalized services that Harrods offers—from gift wrapping and bed linen customization to its “discreet” invitation-only personal shopping for its richest customers—will resume.
Harrods had never needed to close its doors before Covid-19, said Michael Ward, its managing director. The business is now looking at every aspect of its current operations and “thinking differently to enable growth, while protecting customers and employees,” he said.
©2020 Bloomberg L.P.