It would be easy to make fun of the takeover of Harvey Nichols by the Sports Direct founder, Mike Ashley, this week. And yet, there is also an element of truth in it. Ashley is, without question, a very smart retailer. But he is more Newcastle than Knightsbridge – and it will be very hard to restore Harvey Nichols to its former glory.
It is a mark of how much London’s economy has declined over the last few years that there was so little interest in buying Harvey Nichols. Once Princess Diana’s favourite store, it was at one time one of the most glamorous fashion retailers in the world.
Its owner, the Hong Kong tycoon Sir Dickson Poon, had, however, tired of its recent losses. The Gulf wealth funds, tech billionaires, and luxury conglomerates like LVMH – who once might have been expected to buy the department store – all turned away. In the end, Ashley was the only real bidder. With a Labour government determined to drive wealth out of the country with extra taxes, sadly it seems no one is interested in the London market anymore.
The problem will be working out how to make the business hum again
In fairness, Ashley is a brilliant businessman. He built Sports Direct up from nothing into one of the largest chains in the country. From that base, he has taken over a whole string of retailers, including the upmarket fashion chain Flannels, the tailor Gieves & Hawkes, and the luxury lingerie firm Agent Provocateur, as well as Jack Wills and House of Fraser. According to Michael Murray, Frasers’ chief executive and Ashley’s son-in-law, Harvey Nicks – as it is always known – is a ‘British institution with significant potential’ and yet one where ‘clear meaningful change is needed’.
The problem will be working out how to make the business hum again. It is, after all, not hard to figure out why the department store has fallen so far from its glamorous heyday. The crackdown on non-doms has meant that the world’s wealthy no longer make London their home. The City is no longer paying out the huge bonuses that were often spent on its clothes and in its restaurants. The threat to impose VAT on tourists, making London one of the few major European cities to tax foreign visitors, means Paris or Milan are more attractive cities for the world’s high-rollers to stock up on designer trinkets. Add it all up, and one point is surely clear: the economy in which Harvey Nicks flourished has vanished.
Ashley may take Harvey Nichols into the mainstream, perhaps competing with its rival at the other end of Sloane Street, Peter Jones. Or he could franchise out its space to anyone who wants it. After all, there will always be someone who wants to sell Paddington Bears to the passing tourists. But it is going to be very tough. Does Ashley have any feel for the Knightsbridge market? He might keep it alive – but will he sacrifice what made it special?
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