Harrods scales up on Asian appeal

Many children at this time of year are eagerly awaiting their Christmas advent calendars, allowing them to open up a window of chocolate surprises every day in December until Christmas. Not content to let children have all the fun, luxury retailers like Harrods have placed a spin on the traditional advent offerings catering to the tastes of their loyal and affluent clientele.

Little wonder then, that when Harrods launched its beauty advent calendar, offering daily doses of highbrow cosmetic products throughout holiday shopping season, it was first launched on WeChat before anywhere else and was gifted to a Chinese influencer.

As the venerable 174-year-old London store in Knightsbridge feted a Dolce and Gabbana Christmas, it flew in four KOLs with targeted Chinese audiences to take part in the evening’s festivities—with full coverage on WeChat.

“The Chinese customer group is now our biggest of all,” Harrods managing director Michael Ward told Campaign on a recent trip to Hong Kong and Shanghai.

What Harrods and Chinese shoppers share is a love of exclusivity. Unlike American customers, “Asian shoppers don’t have that discount mentality. What they want is the very best of everything. They want something that’s unique and they’ll search that out,” says Ward. “Because of our relationships with the brands we’ll have that product that no one else has got.”

Courting China

But all relationships need work. For Harrods that means regular trips to China. Ward visits at least four times a year, mostly meeting with their most loyal customers but also potential customers and business partners. He’s been doing this for a decade now.

“This has been a long journey and this is part of the reason why we’ve been more successful with the Chinese customer going to the UK is we’ve built that trust over the many years that we’ve been coming here.”

On this trip, Ward and his entourage are unveiling a new marketing vehicle: a biannual Asian edition of Harrods magazine. About 30,000 copies will be distributed in the region in partnership with Mandarin Oriental and first-class airline lounges, with about 18,000 copies mailed directly to customers in Hong Kong, Kuala Lumpur, Bangkok and Singapore. “We find the ultra-net worth still likes that tactile nature of paper,” said Ward.

While the magazine will have some local editorial contributions and Ward is seeking Asian advertisers, its luxury lifestyle content is largely global in nature with existing brand advertisers. The magazine not only serves to build customer relationships and market products, but it is also a profitable part of Harrods’ media business, along with its in-store windows and digital displays.

New marketing methods

But a new generation of Asian consumers requires new methods of marketing and outreach. That’s why Harrods was among the first of the Western retailers to take out an official Weibo account six years ago, followed later by WeChat. Chinese social campaigns, like its Christmas gift hunt on Weibo, have become marketing fixtures over recent years. Harrods boasts the most Weibo followers of any British retailer in China, or global retailer without a mainland store presence, for that matter.

To make payments easier, the store accepts Alipay transactions and plans to add WeChat Pay services next year.

With KOLs exploding on the Chinese marketing scene, influencers “are definitely becoming a bigger and bigger part for us,” said Harrods international manager Natasha Williamson. “We look at KOLs that work in China but also locally.”

Given the pace with which luxury retailing is moving online in China, it would seem inevitable that ecommerce would be Harrods main driver of Chinese sales. But it isn’t.

“Online is something that we are really pushing at the moment but still represents a relatively small portion of our business,” says Ward. That includes its biggest customer group, the Chinese. The vast majority of sales amazingly still come from the Knightsbridge store. Just as astounding, Ward reveals, is that nearly a quarter of a Chinese national’s average total spend while in the UK is made inside that Harrods store.

"Everything we do now will be experiential"

Unique products are clearly a big draw for Chinese customers. But what Ward is most excited about is continuing to make the Knightsbridge store an experience destination for all his clients.

It’s a key driver behind Harrods’ largest overhaul in its history—a £200 million (US$265 million) capital project that will reinvent the store alongside needed investments in ecommerce.

Already some key features are coming into place. Ward delights in sharing the details of Harrods three-and-a-half ton coffee roaster, its open bakery with bells that ring each time fresh product hits the shelves, its tea tailor with special blends and custom packaging, and master chocolatiers.

“It’s not simply about building something," he says. "It’s about the substance that supports it. Whether it’s about wines or cigars or beauty, everything we do now will be experiential.”

“This…goes beyond the purchasing. It becomes a proper relationship,” Ward continues, moving on to the fourth floor wellness center now with its dieticians, nutritionists vitamin injections and cryogenic freezings.

And if customers want to come for these experiences then brands want in and Ward will happily give them the freedom to dazzle. With luxury brands, you don’t need to worry about meeting your high standards.

Dolce & Gabbana Christmas at Harrods

This year’s Dolce & Gabbana Christmas, for instance, featured a D&G tree with a D&G band, with D&G overrunning the Italian marketplace, selling D&G fridges, toasters and kettles in the kitchen area while a fashion show with 100 models took over Harrods meat and fish room. “That may give you an idea of what we allow in terms of [brand] freedom,” Ward quips.

No store in China?

With the ability to stage such retail spectacles and such a devout Chinese fan base, it once again raises the question of why not a Chinese store. Harrods’ Qatari owners were rumoured to be considering one, but aside from pop-up stores—like the Harrods tea room at the British House near Tiananmen Square in Beijing—it has so far resisted.

“There’s only one Harrods. To think that we could come to China and open up a half a million square feet and replicate what we do in Knightsbridge I think would be a bit of arrogance,” Ward says.

But Ward admits there’s more to it than that. Setting up a mainland shop would not just be a risk financially, but a potential blow to brand equity.

“In honesty, there aren’t very many success stories of retailers going to America or China and being true to their own DNA and being successful,” Ward says. “I look at the stores that have set up in China. They don’t look like their mothership. And we can’t have that. If it’s Harrods it’s got to be Harrods.“