What: The Harrods Residence project due to open in Shanghai in December.

Why it is important: Harrods is experimenting with a new format in China, which aims at increasing brand recognition while limiting risks. It is smart especially in the way they plan to build personal relationships with local Chinese affluent customers, without even engaging in a physical stock supply process.

Harrods tested for the first time a physical presence in China during the Fashion Week by opening the Harrods Studio, a 3 days showroom,  during the Fashion Week dates by invitation-only. It was a smart way to address local high net worth customers, unable to travel to the UK, and provide them the Harrods feeling. The Residence project takes things even further by literally opening permanent stockless VIP lounges and showrooms, including personal stylists and communal areas for VIPs to invite and meeting their friends. Harrods has projects in Shenzhen, Chengdu, and Beijing as well.

The reason for such a strategy, in addition to the Outlet, opened in London Westfield and H-Beauty: they anticipate that, with the degrading relationship between the US and China, the UK will become a nicer destination for affluent Chinese in the future. Harrods wants to take a step ahead and make sure its brand is recognized even before tourists come back. The MD Michael Ward is even planning to host local dinner parties on a monthly basis. The economical catch? There will be no physical stock in the VIP lounges: the department store counts on its relationships with brands to locally supply the sold products.

Harrods Shares The Residence Shanghai Details, Eyes Further Chinese Cities