What: Drapers delves into the challenges that luxury department stores face and how the businesses can evolve following the departure of the Harvey Nichols CEO, Manju Malhorta.

Why it is important: Top department stores are tackling how to stay relevant despite growing profits and operating losses.

Harvey Nichols has yet to return to profit since the pandemic hit with its latest results reporting an operating loss of GBP 3.7 million in the 2021-22 fiscal year, an improvement from the GBP 17.7 million in the previous year. Harrods has more than doubled its operating profits in the year to January 28 2023, up from GBP 71.4 million- it still has not surpassed its pre-pandemic figure of GBP 237.1 million.

A director of a brand stocked at Harvey Nichols believes that store activations are important for department stores to garner traffic and customers. Examples of this would be Harrods introducing the Prada café or the Dior Christmas takeover.

Another director says that young customers and newer brands are essential for department stores to stay relevant. “Department stores need to understand who their core consumers are and focus 80% on that but it’s also important to play around the edges with the other 20% on attracting the younger innovative customers [with newer brands].”

Loyalty programmes are also useful for gaining sales, as it creates a more personal experience for shoppers. Harrods has launched a scheme like this with its invitation-only members’ club in Shanghai, and Selfridges has done the sale with its Selfridges Unlocked feature that gives exclusive offers to members.

How to reinvent the luxury department store