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  • Writer's pictureRosie Burbidge

The future of luxury in a post pandemic world - the Harrods take

Updated: Nov 20, 2021

Inevitably the pandemic took centre stage at the Luxury Law Summit (3 September 2020) but thankfully it was not the only issue in the spotlight.

Harrods' pandemic experience

The keynote speaker was Michael Ward, the Managing Director of Harrods. He talked about the impact on the business and the difficult decisions that they have had to take in order to get the business ready for the changes over the next 1-2 years.

One of the first issues was the impact of the redundancies. Whilst the 700 job losses have been across the board, Michael acknowledged that there has been a particular impact on the beauty side to the business due in part to the fact that customers can't sample and experience make up in store. However, he also noted that beauty is a millennial focused business. It is an entry point into luxury for many but these customers are not travelling and have less disposable income. As a result, beauty is facing an uphill struggle in the pandemic.

They now have completely different protocols across the whole business. Rejected products have to go into isolation into sealed bags. The experience is still there in Harrods. The customer has had experiences of other products.

One major innovation that Harrods has had was the Harrods Outlet that opened in Westfield London (in Shepherd's Bush) in mid June. Michael explained that this was opened for two reasons: (i) to prevent an "avalanche of stock" hitting the main store and (ii) more importantly, it wasn't possible to social distance in these circumstances.

Harrods normally has around 80,000 customers a day during sale periods which means that they can sell through in around 4 weeks. The current store capacity is around 4,500 - clearly those customer numbers don't work if sell through within even 4 months is the objective.

The transformation of Debenham's in Westfield into Harrods Outlet in five weeks is incredibly impressive. The aim is for Harrods Outlet to trade Spring/Summer stock until March 2021.

This also meant that they didn't do mass discounting (i.e. no more than 50%) creating a win/win situation for brands. Many other stores went as high as 70-80% discounts at points. Clearly this isn't ideal for already struggling brands.

Another big innovation has been around private shopping which was particularly led by the Chinese business. Like many, they see China as the key to future growth.

Now that people have had a chance to get back to basics, where does luxury sit in a post pandemic world?

Michael pointed out that this is the same question that was asked after the global financial crisis. However, luxury was able to stabilise very quickly after the global financial crisis because it produces beautiful and high quality desirable products. This desire won't change. China has already got back to its previous levels.

The key change is that there will be a refocus on sustainability. The impact that we are having on the globe is spread over a longer period but people are starting to become aware of the impact and ways in which the impact can be reduced.

Europe has been particularly badly affected by the virus due to its dependence on overseas buyers. Until travel comes back, this situation won't change. Heathrow won't be back to normal until 2021. Without the people, they won't have the sales.

What do we need to do in order to get back to "normal"?

The key is getting back to physical touch. Michael pointed out that the look and feel of products is essential to luxury. This simply isn't possible at the moment so luxury needs to either find alternatives or ways of touching products safely.

Luxury is willing to be tested before and after travel. This applies for the luxury customers as well. The rate at which this happens is outside of luxury's control.

How will tech evolve alongside luxury?

Tech is the one sector to be doing fairly well during the pandemic. How can luxury learn and benefit from tech? After the global financial crisis, luxury re-assessed its distribution channels. It benefits from selective distribution which meant that brands took much greater control of distribution leading to the decline in the wholesale model which is set to continue.

Covid has led to the same revolution but from more of a technology perspective. Post Covid there is likely to be a reduction in the number of wholesale digital accounts and much tighter control of distribution by brands. In other words, less wholesale and more direct to consumer (D2C).

Any other predictions?

We are once again seeing the acceleration of the super brands. It's never impossible for new brands to enter luxury but they will need to innovate in order to be successful. Michael highlighted Walpole's Brands of Tomorrow programme which offers 10 emerging brands each year the opportunity to gain the contacts, knowledge and experience to grow to the next level.

Walpole is the official sector body for UK luxury. It was founded in 1992 as a not-for-profit organisation and includes more than 250 British brands in its membership.

To find out more contact Rosie Burbidge, Intellectual Property Partner at Gunnercooke LLP in London -

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