Sales at Harrods exceed pre-pandemic levels despite economic downturn
Harrods' Managing Director said he was confident that the luxury department store would prosper in an economic downturn because “the rich get richer in a recession”.
Speaking to the Financial Times, Michael Ward, Managing Director at Harrods, described the retailer as a “shop window to the world”, confirming that the business was now “trading ahead of 2019” after it was hit hard by the COVID-19 pandemic and a lack of tourists in London during low levels of international travel.
He continued: “COVID was a good kick for us to refocus on our local customers. We continue to go from strength to strength here. Statistically the rich get richer in a recession...whatever your political persuasion.”
With the UK narrowly avoiding recession in 2022 and financial pressures continuing to mount, almost three quarters (73%) of UK consumers are planning to cut back on retail spending over 2023, with fashion set to be the retail category hardest hit.
According to a forecast of the year ahead by VoucherCodes in its ‘2023 Spending and Saving Report’, fashion sales will fall by 6.5% year-on-year, from £44.50bn in 2022 to £37.43bn by the end of the year.
Ward, who has been at the helm of Harrods since 2005, also said that the Windsor framework, designed to reform Northern Ireland’s post-Brexit trade rules, was “a real step forward” in the UK’s fraught relationship with the EU, even if an optimal arrangement wasn’t “there” yet.
Ward recently said that the 173-year-old retailer is falling behind Paris and Milan's luxury trade due to the decision to stop VAT-free shopping. He claims that the decision has put tourists off making luxury purchases in Britain’s capital city.
Ward also said that shoppers increasingly bought goods from a few prestigious “superbrands” such as Louis Vuitton and Hermès. He concluded: “The constant trend is people going for more and more and more premium items. The rise of the superbrands is getting absolute, so that middle ground of the market is becoming tougher and tougher.”