Harrods will open its first private members’ club in Shanghai later this year targeting ultra-high net worth individuals as the luxury retail company pins its growth hopes on China.? It is looking to diversify its portfolio and expand into the integrated entertainment sector. The new facility will be based in the historic area of Cha House, built in 1920, and will have a Gordon Ramsay restaurant, entertainment facilities, a bar and lounge, private dining rooms and terraces for members. Annual fees will start from Rmb150,000 (￡16,000).

 

China the biggest market in the world

 

Harrods is owned by Qatar’s sovereign wealth fund and is already operating in Shanghai.

 

“People don’t like to display wealth as much as they used to do and having that ability to be with like-minded people is hugely important,” said Michael Ward, managing director of Harrods. The retailer, which is ultimately owned by Qatar’s sovereign wealth fund, already has a tea room in Cha House and a bar, which are both open to the public. Only 250 members will be able to join the members’ club with additional members considered following peer nominations. They will have access to other services that Harrods already offers such as premium travel options and property services.

Ward said that Harrods’ owners were supportive of the expansion in China as they “recognise that there is this switch to the east” in terms of luxury growth. China accounted for 16 per cent of the retailer’s sales last year.

 

He added: “China is going to be the biggest market in the world. It will serve itself largely, but for the special, exclusive pieces they will still look somewhere to the west. For the ultra-high net worth, we’ll be there, we’ll be their port of call, that’s the objective [with the private members’ club].” Asked about growing tensions between the US and China and its potential impact on spending, Ward said: “[The ultra-high net worth are] so insulated, it doesn’t impact it at all. We saw that through the financial crisis, we saw that through the recovery from Covid, when customers came back with a vengeance, and so we don’t have any problems about that. We’ve always sought to develop really strong relationships in China.”

 

Harrods is on firm financial footing

Ward also confirmed that the luxury department store, famed for its building in London’s Knightsbridge, refinanced ￡620 million of bank debt that was due in October, although he acknowledged that the group secured “a little bit less [loan] on slightly higher terms because of interest rates”. But he added that the retailer was on a firm financial footing. Turnover increased from ￡485 million to ￡654 million for the year to 29 January 2022 and it recorded ￡17.4 million in pre-tax profit, compared to a ￡118 million loss the year before, its most recent Companies House accounts show.

 

In June, Harrods offloaded its ￡400mn pension scheme liabilities to Scottish Widows, securing retirement benefits for about 1,900 pensioners and 2,100 deferred members.

 

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