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Luxury retail is no longer about selling the latest products to a wealthy client; it’s about connecting with communities through shared interests and offering unique experiences. That’s the vision of British luxury retailer Harrods, which is launching its first-ever private members’ club at the end of the year in Shanghai, China. If the launch is successful, more openings could follow globally.
The new club boasts private dining rooms as well as a bar, lounge and outdoor terrace. Members can taste British chef Gordon Ramsey’s first dining experience in Shanghai and some of the world’s most sought-after liquors, such as Macallan whisky and Louis XIII cognac. They will also have access to ultra-premium services in aviation, real estate, interior design and personal shopping, as well as private events and masterclasses hosted by brand partners. It’s based in Cha House, a municipally protected building spanning over 5,620 square feet in the Jing’an District.
The club, according to Michael Ward, managing director at Harrods, is “being created to serve a curated community of discerning members”. Harrods will not only bring international dining, spirits, lifestyle and concierge services to a regional audience, but also create “a like-minded network” of individuals, offering a space for them to enjoy experiences together.
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There are three membership tiers, with annual fees starting from RMB 150,000 (about £16,000) and going up to RMB 250,000 (about £26,700). Each tier unlocks access to exclusive experiences and benefits. A total of 250 members will be accepted to join at launch. Additional members will be considered further down the line, taking peer nominations into account. Harrods’s desire is to create “a home away from home” where “people will want to spend time and meet others that inspire them”, says international business development and communications director Sarah Myler. Those applying for a membership will be asked to share their personal interests. “We’re trying to build a community of people with shared passions.”
The launch comes at a time when luxury retailers are looking for ways to differentiate. Several established players have lost their competitive advantage or are struggling to make a profit amid rising costs. Some have closed their doors. New membership incentives serve to heighten the experience.
As part of its ambitious £200m refurbishment, the British luxury department store is overhauling how it sells womenswear with a focus on discovery and experience. After the DTC boom, it’s a much-needed play to attract and retain consumers.
Last week, Selfridges unveiled its new membership scheme, Selfridges Unlocked, which offers members access to masterclasses with big beauty names, film releases and supper clubs, as well as other unique curated experiences. Farfetch-owned Browns has The Club, a tier-based membership based on spend per annum or invitation, which provides members with exclusive access to events, products and personal shopping services. British multi-brand retailer Flannels, London boutique Htown, and Los Angeles store for cool kids Terminal27 all tap into local communities, with the aim of creating a less transactional and more culturally connected ecosystem.
“Loyalty schemes have been around for a number of years, but more premium retailers probably don’t want to go down the avenue of giving cashback and discounts because it can affect their profit margin,” says Wizz Selvey, who founded independent consultancy Wizz Co in 2018 after working for Selfridges for more than a decade, most recently as head buyer. “Their point of difference is exclusive experiences and products. Positioning something as a membership over a loyalty programme gives the perception to the customer that it’s more exclusive, because not everybody is involved. It makes them feel special.”
Harrods’s foray into the world of private membership adds to its existing hospitality offering in China — it currently operates a tea room and bar — and marks “a new vertical” for the retailer, but “is rooted and anchored in what we do best”, says Myler. Harrods has added 25 new hires to its current 65 hospitality employees in China, and continues to actively recruit, she adds. If the first club is successful, more openings will follow. Chengdu and Beijing are top of mind.
Chinese consumers accounted for 23 per cent of Harrods’s business in 2019, according to Myler. That figure fell to 16 per cent in 2022, she says, although she notes Chinese customers at the Knightsbridge store have grown 17 per cent within the last month alone, compared to the month prior, thanks to the recent lifting of China’s strict zero-Covid regime. “We had a bit of an interruption during Covid but it did allow us to listen even more closely to our clients. What they wanted us to deliver more of was a customer service and hospitality-driven offering,” she says.
A new entry point to luxury
The club also fits into Harrods’s broader strategy to rival the experience luxury brands provide in their own stores, says Ashley Saxton, director of restaurants and kitchens. Louis Vuitton, Prada, Fendi and Dior are among the luxury brands that have launched cafes and other immersive experiences at Harrods in recent months, he notes. “A lot of these super brands are using hospitality as a new entry point for consumers.”
Hospitality done right can help create and elevate a luxury destination. “The usual entry point in luxury is accessories. What’s changed is that hospitality [has become] an even easier way for someone to engage with brands,” observes Saxton. To capture the discerning shopper, “it’s not just about the product but the experience that goes with it as well”. The club is an opportunity to “build brand equity and strengthen relationships”, so that when Chinese tourists come to London, “the only place they wish to dine and shop is the mothership, which is Harrods”, he says.
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Membership can encourage consumers to shop more, says Wizz Co’s Selvey. Some retailers offer annual paid membership perks such as unlimited free online deliveries, which makes a customer more likely to shop with them over a competitor, she explains. “It encourages repeat and potentially more frequent purchases, which is likely to improve the customer lifetime value.” Prioritising a higher-end clientele also makes a lot of sense, she continues. “If you have lots of purchases at a low basket size, it’s not very profitable for the retailer. It’s more profitable to have less purchases and a larger basket size.”
To stand out, Harrods is leaning into hyper-personalisation. “[The club] is deliberately extremely exclusive so that we can cater to the needs of each client,” says Myler. Benefits are tailored to the individual, she explains. “If that means unlocking a silent distillery in Scotland, for example, Harrods has the relationships and network to make that happen.” Localisation also plays a key part: the club will feature a revolving roster of experiences that spotlight local talent.
Harrods’s goal is to appeal to young consumers earlier on their luxury journey, Saxton adds. “We’re future-proofing our business by engaging with a customer base that in future years could shop across [other categories like] fine jewellery and watches.” Fostering that kind of loyalty can be beneficial for many years to come, he believes. After all, a club is a club: once you’re in, you’re in.
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