The iconic doors of Harrods’ Knightsbridge store closed for the first time in its 172-year history in March 2020, when prime minister Boris Johnson enforced an initial lockdown to stem the spread of coronavirus. But what did this mean for the supply chain of arguably the world’s leading luxury department store?
Incredibly, the London stalwart remained open throughout the Blitz and only shut for half a day following a 1983 terrorist attack. Consider the joy, for staff and customers alike, when the doors were unlocked on April 12.
Speaking on the eve of the reopening, Harrods’ supply chain director Simon Finch reveals a “back-to-school feeling” and is optimistic that footfall will be impressive, despite the lack, for the moment, of wealthy tourists. “People are very keen to come back in and Harrods has the benefit of being 1.1 million square feet, so there’s plenty of space for social distancing,” he says.
From now on, the supply chain must be more about agility, to cope with volatility and uncertainty, and less about being lean
Finch began his career at Harrods 25 years ago as a graduate trainee. The amateur high-altitude mountaineer, who has scaled Himalayan peaks as well as the highest reaches of Africa and Europe, has climbed the corporate ranks and was appointed to his current role in October 2019, less than six months before the first lockdown.
While both his employer’s online operations and warehouse remained open for the duration of the pandemic, the 46-year-old concedes, with admirable honesty, that like so many other supply chain professionals, he was forced to grapple with unforeseen operational challenges and struggled initially.
“We were probably all a bit too overconfident in the system, a bit like those in financial services when the economic crash happened in 2008, and when something unexpected hit, there was a lot of scrambling around to make things work,” he says.
Championing the technology-driven supply chain revolution
Like other UK retailers, Harrods has been buffeted by the coronavirus crisis and, more recently, Brexit fallout. It is the pandemic, though, that exposed operational weaknesses.
“The pandemic has triggered a supply chain revolution,” says Finch. He argues, convincingly, that businesses were “obsessed with making supply chains as lean as possible” before COVID, moving items around quickly, with minimal stock and expense.
“Coronavirus completely screwed up that approach,” Finch continues, “as the organisations holding themselves up as having the leanest supply chains were the ones that had the most significant challenges as soon as there were global disruptions.
“From now on, the supply chain must be more about agility, to cope with volatility and uncertainty, and less about being lean. However, that agility has to be fully supported by technology and data insights. Whereas previously we have used technology to create a leaner supply chain, now the tech needs to provide the knowledge to make better decisions to drive agility and visibility.”
Data can’t get stuck in the Suez Canal, nor does it get held up at the borders with Europe
Given that Harrods was established in 1849 with the rather ambitious motto of omnia omnibus ubique (all things for all people, everywhere), the consumer behaviour trends accelerated by the pandemic forced the business to keep pace with change and embrace the digital age. Little surprise, then, that Harrods has recently employed more data scientists.
“Understanding our customers, and how we can serve them better, and starting to use artificial intelligence, whether for our replenishment operations, to make sure we have the right amount of stock, or to manage outbound fulfilment volumes, is paramount,” says Finch. “Data can’t get stuck in the Suez Canal, nor does it get held up at the borders with Europe. And the sharing of data with our partners delivers a better operating model for the end-to-end supply chain.”
Data insights and deeper relationships driving sustainability
Technology alone, though, is not enough to drive the supply chain revolution, according to Finch. He contends that it is critical for those operating in the industry to “go retro” and forge or nurture deeper relationships with suppliers, service providers and brand partners.
“Because the pandemic messed everything up, and we didn’t know what was happening, we picked up the phone and spoke to trusted partners and suppliers to all pull things together,” he says. “It was a return to the supply chain of the 1900s.”
Moreover, the combination of emboldened trusted relationships and data insights, plus greater diversity in terms of distribution nodes, inside and outside the UK, enables Harrods to develop a more sustainable supply chain.
The sustainability agenda is critical to the luxury industry and we will lose sales if we don’t do this right
“As a father to two eco-conscious girls, I’m incredibly passionate about sustainability and building a brighter future,” says Finch. “I believe it’s the responsibility of all supply chain professionals and businesses to ensure we are doing the right thing for our customers. Therefore, putting the product closer to the consumer, through a decentralised supply chain and more localised distribution, is a win-win scenario.
“Also, from a purely commercial perspective, this is the direction in which our customers want us to go; the sustainability agenda is critical to the luxury industry and we will lose sales if we don’t do this right.”
To illustrate his vision, Finch uses an example of how inefficient and harmful to the planet the supply chain and fulfilment processes can be from an ecommerce perspective. Goods might be manufactured and shipped from the United States to the UK only to be then sold online and shipped back to an American-based customer.
“We are doing everything wrong if we create that unnecessary movement from a sustainability perspective, and also it increases costs and length of delivery time,” he says.
The COVID crisis may have sparked a supply chain revolution, but it is a work in progress for many retailers, including Harrods. Stressing the importance of diversity, data insights and developing trusted relationships for supply chains of the near future, Finch adds: “By having products that are local to customers, we can serve them more quickly, more cost effectively and more sustainably, while reducing risk, because the goods aren’t moving as far.”
Through shifting its business model and with this smarter, tech-powered approach to the supply chain, Harrods will stand a good chance of keeping its doors, both physical and virtual, open for many years to come.
