What: Harrods’ sales have overpassed their 2019 levels even though the Chinese customers are not back and the UK has been handicapped by the decision to scrap VAT refund for foreigners.

Why it is important: For the CEO, the question in 2023 is not to know if sales targets will be met when it comes to luxury brands, but rather to be sure the store will receive enough supplies from the brands, now that they have built their DTC capabilities.

The boss of Harrods, Michael Ward, has expressed confidence that the luxury department store will continue to prosper in an economic downturn. He believes that "the rich get richer in a recession" and that this will benefit Harrods. The store, which Ward describes as a "shop window to the world", has been trading ahead of 2019 levels despite being hit hard by the Covid-19 pandemic and a lack of tourists in London during lockdowns.

According to Ward, Covid-19 was a good opportunity for Harrods to refocus on local customers, which has been successful as British shoppers are now responsible for the majority of spending. This is in stark contrast to 2017, when Chinese nationals were the store's biggest spenders.

Despite the pandemic, the luxury goods sector is predicted to continue to grow by at least 3% to 8% in 2023, according to analysts at Bain & Co and Altagamma. French luxury group Hermès had an "exceptional" year, with a 23% jump in annual sales, and industry giant LVMH posted record profits for 2022.

Ward also commented on the UK's relationship with the EU, calling the Windsor framework, designed to reform Northern Ireland's post-Brexit trade rules, "a real step forward". However, he noted that an optimal arrangement is not yet in place.

Overall, Ward's comments suggest that Harrods is in a strong position and will continue to thrive, even in difficult economic times. The store's focus on local customers has been successful, and the luxury goods sector as a whole is predicted to continue to grow.

For Harrods, there is no recession