CEO Talks: Michael Ward, Harrods’ Managing Director, on His Vision for the RetailerWard, who tried — unsuccessfully — to step down last year, wants to make the store more experiential.
LONDON — Before Michael Ward arrived at Harrods, management was one big merry-go-round under the mercurial, controversial — and ever-colorful — Mohamed Al Fayed, who eventually sold the store to Qatar Holding LLC, the investment company linked to the royal family of the Gulf state, for $2.22 billion.
Ward, who joined Harrods in 2005, broke the spell. A charmer and diplomat with a nose for numbers and a passion for product — he speaks as enthusiastically about his new Big Green Egg barbecue as he does about the rare pink diamonds in Harrods’ fine jewelry department — Ward knew how to manage Al Fayed (not an easy task) and drive sales and profits at the iconic Knightsbridge retailer.
He was also the man who helped Harrods transition successfully to new ownership under the Qataris in 2010, and has been instrumental in attracting and accommodating tourists from China, the Middle East and Africa. On Ward’s watch, the store has grown alongside competitors such as Selfridges, and continues to invest and expand.
In fiscal 2016, Harrods saw a 4 percent uptick in sales to 1.4 billion pounds, and a 40 percent rise in operating profit to 178 million pounds, with particularly strong trading in fine jewelry and watches.
The store has also been budgeting about 50 million pounds a year in capital expenditure, with recent launches including the Wellness Clinic and an expanded Salon de Parfums. There are more changes on the way.
Ward tried to resign last year, but the Qatari investors wouldn’t let him and instead asked him to stay and oversee further expansion and refurbishment. He’s now back at Harrods indefinitely and preparing to upgrade the food hall and beauty, fine watches and men’s wear departments.
Ward, who is from northeast England and has homes in the Midlands and in London, started his career in chartered accountancy, training originally with Ernst & Young in 1980 before becoming group finance director for Bassett Foods Plc in 1986, gaining an MBA at the same time. In 1989, he took up a similar role at the drinks company H.P. Bulmer Holdings Plc.
In 1994, he became managing director of Lloyds Chemists Plc, and later held retail roles at companies including the private equity group Apax Partners. The shift to fashion and luxury retail wasn’t a difficult one.
“We are very simple retailers,” said Ward. “If you’ve got beautiful stock, great ambience and amazing, knowledgeable service, you’ll do well.”
Here, he talks about expansion at Harrods, the devils on his shoulders and the reason he decided to stay at the store.
WWD: What’s been the thinking behind all the structural changes at Harrods?
Michael Ward: I always say I’ve got two little devils on my shoulder. One of them is Hermès, and the other is Chanel. When somebody presents me with something, I look over on one shoulder and say, “But would Hermès do this?” And I look at the other shoulder and think, “Well, would Chanel do this?” If the answer is no, then why would Harrods do it? And that’s been a great big guiding light in terms of “How do we make this building just exceptional?”
We can’t afford to stand still, and we really believe in the growth in the luxury industry. We believe that if we make the store experiential, if we stretch the consumer’s imagination and expectation of a department store, we will be successful.
WWD: What projects do you have in the pipeline?
M.W.: We want to make the food halls the gourmet capital of London once again. We want to bring excitement and entertainment into them, and put the product at the core. Over the next three years we’re redoing all four food halls. We’ve been getting the best patisserie chefs from the best culinary schools in Europe and are bringing them to London. We’ll have an amazing sourdough bakery, and a chef — effectively — who controls coffee roasting. We’re going to build a new wine and spirits area, and a new cigar lounge.
We are doubling the size of our watch space. Our job is to make sure we get the really unique and amazing pieces. There will be private consultation areas and amazing amounts of stock. Most retailers fall down because they don’t have the stock. If you go to our Rolex department in general and say, “I would like a Daytona,” they will give you the choice of every one other than the one that’s on the waiting list. The customer wants to walk in and see the gold, the rose gold, the steel and gold, and the steel. They want to choose, and they want to walk away with it, which means we have to have millions of pounds worth of watches in stock, which we do. It’s about making the consumer happy.
WWD: Do people buy fine jewelry in the same way?
M.W.: When we started the journey in fine jewelry I remember that big sales were a rarity. Now they are the norm. What we’ve done is created that environment where we have the best jewelers in the world in one place. Today, people ring us up and say, “I’m thinking about buying a 3-carat pink diamond.” Pink diamonds are like hens’ teeth, but we can present them with a number of examples from the jewelry room.
WWD: Can you talk about your plans to expand the ground floor beauty hall?
M.W.: People want the experiential side of beauty: They want to understand how to sculpt, to contour, to do that eye look, which is why we’ve seen the emergence of these disruptor brands like Huda, which has gone from nothing to being in our top five brands. We’ve seen the emergence of Charlotte Tilbury. It’s about the immersion and the education. That’s central. What we want to do is create a new area for beauty, and we’re going to broadly double the size of our beauty business to be able to engage with those new trends.
On the ground floor, the beauty rooms will become fashion accessories rooms, while the whole run at the back will become beauty, with the lower ground floor turned into beauty and consulting rooms. That means we’re going to have to relocate men’s. Our men’s wear business is one of our fastest-growing apparel businesses, so we’re going to put them on the entirety of the second floor. Our intention is to create a replica of what we’ve done for women’s with Super Brands, and to take men’s retailing to a totally different level.
WWD: Harrods has always been a magnet for tourists. What sort of trends are you seeing?
M.W.: People love coming to London, and that’s why we’ve seen strong tourism. It’s been very strong from China and from Southeast Asia, and there is continued strength from the Middle East. There is also an increasing interest and growth from America. For Americans, the cost of coming to London is a lot less, so it’s become more accessible.
WWD: Aside from the weaker pound, has the prospect of Brexit impacted the business at all?
M.W.: At the moment there’s just so much noise from every different direction that it would be wrong to say there is any trend. We know if we carry on doing what we’re doing, we’ll collect customers. Customers really don’t think of Brexit. In the U.K. we’re fixated on it, but if you’re looking to buy and to come to London shopping, Brexit is irrelevant. The prices of all of the brands are the same as they are in Paris. What consumers are saying is: “London’s a cool place to be, and I want to go and see what Harrods is doing.”
WWD: I know you won’t talk numbers beyond what’s been published on Companies House, but can you say where growth is coming from?
M.W.: We’re seeing good growth across the business, which is why we’ve also been investing in restaurants because they complement our core. It’s why we’re tackling the food halls. You can’t leave one part of the business behind. You’ve got to take the whole thing.
WWD: Are you seeing increased competition from the big, fast-growing e-commerce businesses like Yoox Net-a-porter, Matchesfashion.com, MyTheresa.com and Farfetch?
M.W.: There is a growth in the market that we were all fulfilling — and they are making [products and services] more accessible in certain areas. If we sat back and said that we’re just happy being a department store then we’d lose market share. If we decide we are going to grow and make this a really intriguing experience, then we can win. I really believe we can do that. They are great competitors, they’ll compete with us on the Internet and in the dot-com business, but we’ve just got to make sure we are that little bit more special.
WWD: What have you been doing to up your e-commerce game?
M.W.: We’ve just spent a lot of money re-platforming our dot-com business. We’ve gone live with it, and we’re just getting out all of the bugs. Being Harrods, we’re going to be careful and cautious and make sure that the customer journey is right. When we feel that we can really push the button on it — which will be early next year — we’ll push that button.
For us, e-commerce is not going to be about innovation. All we’re going to try and do is provide a great service to our customer, and do it in a way that we don’t lose our market share. We won’t be doing all the fancy things like having butlers turning up to people’s houses and things like that because we won’t make any money out of it. We’ll be focusing on what is really important to the customer.
WWD: Last year, you said that you were stepping down. What made you U-turn a few months later?
M.W.: Two or three things. It was a conversation that I had about my time scale, and we probably didn’t do the transition and recruitment as well as we could have done. When the time came for me to leave, we didn’t have anyone whom the owners really wanted to put into place. So they said, “Would you stay for a little while?” During my last years here, I had also wanted to start this piece of work about the next vision, of what Harrods would look like. The owners took one look at it and said: “You’ve got to do this because it’s reasonably complex and you know the individuals.”
WWD: How long do you plan do stay on?
M.W.: I’m not putting any timelines on it because then all people will do is fixate on a timeline.
WWD: Can you talk a little bit about how the Qatari owners are different from Al-Fayed?
M.W.: Mohamed was an individual. He was all about personalities. He wasn’t formal and he managed Harrods in a different way. Everybody thought he was really hands-on — but he really wasn’t. He walked the store every day, and as long as you dealt with the concerns that came from what he saw, he was fine. He would have never thought about repositioning this, doing that, he wouldn’t have.
WWD: What is the new owners’ management style?
M.W.: They are professional shareholders. They want to have regular board meetings, to make sure their returns are there. We’re in the very fortunate position that Harrods is a great asset for them, it’s doing well. So it gets quite a lot of ticks in their portfolio. They want us to have high levels of corporate governance, which of course we do, and they want to see us performing as we say we’re going to perform. They expect us to manage the business.
WWD: How would you describe your management style?
M.W.: It’s about engaging people and making sure we get the best out of people. All of the things we talk about come through debate: What do you think we should be doing? How can we push this barrier? But why would we do that? How can we do that? It’s that constant wanting to try and strive for something that’s better. It’s not me. It’s the teams that do it all.
WWD: What are you doing when you’re not working?
M.W.: I’m very compartmentalized in terms of my home and work. I love cooking. I love gardening. My weekends are very much my time. I don’t dwell on the Blackberry. In fact I don’t think, in the house in the Midlands, I can get reception. I get it on certain days, certain weekends, but not every weekend. Usually, as I’m driving into London around five o’clock on a Monday morning, I get to a certain part in the journey, just as I’m approaching the M40, when I can hear this “beep beep beep beep beep” as the signal clicks in.
WWD: Tell me about your new house in London.
M.W.: My wife and I have three grown children and since I’ve been working at Harrods, they have all gravitated to me in London. My wife was left in the Midlands asking “Where have my children gone?” So I bought a house in London and my wife comes down for a couple of days every so often, with the dogs.
We did the house in a relatively cool style, and everything is from Harrods. In the kitchen there are the beautiful pastel Smeg colors: A pale blue toaster, kettle and juicer, and this great brand from Australia called Mud. I’ve got this gorgeous red teapot and an amazing barbecue from the Big Green Egg.
I bought the house without my wife seeing it and I furnished it all. She never saw one thing that went into the house until it was finished. She loves it. At Harrods, we do over a hundred shop fits every year, so if we can’t get that right then we really have got something wrong.
