Selfridges up for sale: how colourful past made it British retail's 'jewel in the crown'

Department store set for £4bn auction, with international buyers eyeing up prestigious brand

When Selfridges eventually goes up for auction, all eyes will be on the historic London retail brand to see who snaps it up.

One region particularly keen to see who takes over the reins of the business – considered the “jewel in the crown” of department stores – will be the Middle East.

Spread across five floors on London’s Oxford Street, the brand's flagship store has long been a favourite for visitors from the Gulf and wider Middle East, who enjoy its luxury clothing, food hall, lavish interiors and features such as a sunglasses room, kids' concierge and cinema.

Now the brand is for sale with assets up for grabs including Selfridge’s four stores in the UK – in London, Manchester and Birmingham – along with Brown Thomas and Arnotts in Ireland and De Bijenkorf in the Netherlands.

Some experts even believe a Middle East buyer may be in the mix to take over this prized British asset.

“That’s definitely a possibility,” Darcey Jupp, associate apparel analyst at Global Data, told The National.

“A Middle East buyer would be a really clever way to boost the consumer base they've already got and make it even more successful because they do really drive the sales,” she said.

Although Selfridges declined to comment on the auction or confirm when the sale will go ahead, the starting price is set at £4 billion ($5.53bn), with analysts expecting the winning bid to be much higher amid fierce competition from across the globe.

Parties already touted as potentially interested include Thailand’s Retail Group, HBC, the owner of Saks Fifth Avenue and Hong Kong’s Lane Crawford Joyce Group.

Chinese state-backed businesses and Middle East players are also in the mix, indicating the sale price could quickly escalate.

“There will be a fight for it because its reputation is so huge and it is so prestigious across the world and they are also pushing the sales of the European catalogue as well,” Ms Jupp said.

“It's just a world-dominating name, so why wouldn't you want to have it if you’ve got $4 billion sitting in the bank?”

News that Selfridges was on the market first came to light earlier this summer, before the owners, Canada’s Weston family, launched a formal auction to sell the business late last month.

The Weston family, who are among Canada’s wealthiest and also own a majority stake in Primark owner Associated British Foods, disclosed that a mystery buyer had come forward, with the approach happening just weeks after the death of the 80-year-old head of the family W Galen Weston in April.

Weston Sr spearheaded the purchase of Selfridges in 2003, snapping it up for a cool £628 million, before stepping down as chairman two years ago to make way for his daughter Alannah Weston.

On his death, Ms Weston said the luxury retail industry had “lost a great visionary”, adding that his “positive outlook” and excitement about the future of the brand will “always be part of … who we are”.

His son Galen Weston, chairman and chief executive of the Weston Group, said his father had left behind a “legacy”. But it now appears Selfridges will not be part of the Weston family's future.

Although no formal offer has been submitted for Selfridges, the family has appointed advisers from Credit Suisse to oversee the auction, with an elite group of potential investors receiving sale documents.

Ms Jupp said the decision to sell comes at a “pivotal time for the family” following the death of Weston Sr.

“He really was the spearhead of what pushed the Selfridges purchase for the family in the first place. And it is rumoured that Galen Jr, his son, doesn't really have the same push for it anymore,” she said.

Ms Jupp said the pandemic and Weston Sr's death had made the past 18 months very difficult for the family. "I think the European operations aren't a priority for them any more and that’s quite a sensible move if they're not able to put the effort into the business they think they should,” she said.

Department stores across Europe "are having a really bad time at the moment", she added.

epa07493676 (FILE) - Pedestrians pass a Debenhams store in Oxford Street in London, Britain, 25 October 2018 (reissued 09 April 2019). Reports on 09 April 2019 state Debenhams may be close to administration after rejecting an offer valued at 200 million pounds by Sports Direct to invest in the company. Debenhams that employs 25,000 staff has 640 million pounds worth of debt and issued three profit warnings in 2018.  EPA/ANDY RAIN

The pandemic has certainly not been kind to department stores, with some leading chains disappearing entirely, leaving gaping holes on high streets across the country.

Retailer Debenhams closed its doors for good in May, after 242 years of trading in British towns and cities.

The struggling department store chain, founded in London in 1778, started a liquidation process last December after Covid-19 lockdowns dealt a final blow to its finances.

House of Fraser also took a hit, cutting back its store numbers by about a quarter in response to the switch to online shopping. Even industry stalwart John Lewis has been forced to make job cuts and store closures in recent months.

Despite the wider downturn for department stores, Selfridges has performed fairly well, partly thanks its trusted formula of continued innovation.

Even before the pandemic, it installed a 22,000-square-feet toy section, including a custom-made giant walk-on piano made famous by the 1988 movie Big. It also opened a cinema for customers to use during their visit and an indoor skate park in the contemporary menswear section.

“That became a place where younger consumers who liked skateboarding could hang out," Ms Jupp said.

"It’s quite a revolutionary thing and with their various restaurants, food hall, hairdresser, nail salon – the list can go on forever – it's about making Selfridges a destination rather than just a shop."

The innovations put the company in a strong financial position before the pandemic started, with sales up 7 per cent to £1.97bn in the year to February 2020, although profits slid 10 per cent to £88m.

Despite the pandemic, the brand pushed ahead with its Project Earth initiative to put ”sustainability at the heart of the business” as it looked to transform the way customers shop at the store and the way the customer does business.

This led to it launching its “greenest ever” Christmas shop last year with half of all the products on sale – from cards to crackers and decorations – boasting a sustainable attribute.

Even when it reopened on April 12, it unveiled new ideas such as a partnership with fitness brand SoulCycle to host outdoor exercise sessions just behind the store and, for the first time, the chance to get married in the historic shop.

However, the company has not been entirely immune to the pandemic. In July last year, its group managing director Anne Pitcher sent a letter to employees to inform them of a 14 per cent cut in the company’s workforce, which affected 450 roles.

“Like many others, we are feeling the effects and acknowledge that recovery will be slow, with sales this year forecast to be significantly less than they were in 2019,” she wrote at the time.

In January, Ms Pitcher said 2020 had been “an exceptionally difficult year” and that the ”recovery will be slow”, with sales for that year set to be significantly lower than 2019.

But the company was pleased with the growth in its digital offering, with deliveries to 130 countries helping to “offset the lack of international travel”.

With the auction expected to happen “soon” according to industry experts, the question many are asking is why its founders want to sell a brand that has weathered the Covid-19 crisis so well in comparison to other retailers.

Travel restrictions to the UK are now easing for a number of countries, including the UAE, with wealthy tourists expected to flood the capital once again, but Ms Jupp says it may be too little, too late.

“Tourism, especially for the Middle East, is such an important thing for London department stores just like Selfridges but it's still on a knife edge,” she said.

“We don't know what could happen next month, so the fact that it's so changeable definitely contributed to the reasons for selling because while you can plan as much as possible, the future is still a bit uncertain, especially as you move into the winter months, which are usually Selfridges' best selling months.”

Selfridges' story goes back to 1909 when American entrepreneur Harry Gordon Selfridge opened the Oxford Street store - a colourful character who later became the subject of a popular TV series, Mr Selfridge.

At one point the Oxford Street location was home to more than 100 departments – even featuring a shooting range and a library.

It also became famed for its "story-telling" window displays, particularly at Christmas when shoppers gathered outside for the big reveal to see the lavish decorations.

By the 1990s the store had become dated, but Italian retail expert Vittorio Radice, a former boss at interior design store Habitat, then took the helm, breathing new life into the brand.

He not only revamped the interiors but introduced more fashionable brands and hosted events to entice new shoppers to the store – moves that later helped to attract the Weston family as buyers.

Since then the family has continued to keep the brand at the forefront of retail, investing heavily in the stores, hosting major events and developing high-end restaurants.

When Galen Weston took over in 2003, he stopped the brand’s expansion plans to ensure the focus was entirely on its existing units with the core strategy to make every Selfridges “an innovative place to shop”.

Although some analysts say he adopted an anti-Harrods strategy to ensure the store was everything Harrods was not, it seems this was not the case with Mr Weston once stating that the company’s competition was not rival department stores but the “cinemas, restaurants and any place where customers will go to spend their leisure time”.

Ms Jupp says the distinction between the two brands is clear, with the “quintessentially British" Harrods a more old-fashioned concept, while Selfridges has a more modern and future-focused approach.

“They’ve just launched their second-hand concept and are always looking at what the future customer wants whereas Harrods really celebrates the traditional old style of shopping,” she said.

But with Oxford Street now a graveyard for a number of retailers, and even Marks & Spencer and John Lewis considering converting part of their stores on the street into office space, it might indeed be the right time for the Weston family to move on.

Perhaps future owners eyeing up the department store should stick to the Selfridges magic formula – ignoring expansion in favour of creating destination stores that celebrate experiential retail.

“Selfridges has amazing innovations but being that destination store, that jewel in the crown, helped them very much,” Ms Jupp said.

"Any new owner should just keep on doing exactly what they're doing because, right now, Selfridges is in a really good position in the UK market, which many of their competitors are not."

Updated: August 12th 2021, 9:09 AM
EDITOR'S PICKS
NEWSLETTERS