Americans Exit Harrods Top 10 as Chinese Flock to London Store

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LONDON, United Kingdom — The days of Americans being the biggest overseas shoppers at London’s Harrods store are over.

While seven years ago U.S. visitors were the top foreign spenders at the purveyor of luxury fashions and specialty teas, they are now outnumbered by wealthy customers from China and the Middle East, according to Managing Director Michael Ward.

“It is probable today that America will not feature in our top 10 of overseas customers because of the growth of the east and the mineral- and oil-rich nations,” Ward, who has been in charge for more than seven years, said in an interview in his office at the 164-year-old store. China is “by far No. 1.”

While the credit crunch and falling house prices have pinched at the purse-strings of American shoppers, Harrods has witnessed an increase in spending by visitors from countries such as Thailand, Singapore and Nigeria. That’s just as well for the retailer’s Qatari owners, who splashed out 1.5 billion pounds ($2.3 billion) to buy the store in 2010.

Harrods, which has more than 1 million square feet (90,000 square meters) of selling space, isn’t concerned about the outlook for spending on luxury goods, Ward said.

An estimate by researcher Bain & Co. that the European luxury market will be unchanged to 2 percent stronger this year is a “gross underestimate,” he said.

“We see continued growth in the luxury market,” Ward said. “We feel reasonably comfortable in where we are.”

Harrods’ three-week summer sale, which started June 15, has been a record so far, he said, without providing figures.

Growth is coming mostly from tourist spending, Ward said.

Outpacing Americans

Visitors from China and the Middle East are the biggest contributors to the U.K.’s overseas tourist spending, according to Global Blue, which runs a network that enables foreign shoppers to claim back value-added tax.

Americans slipped to seventh position from sixth in the five months through May, outpaced by the growing wealth of shoppers in nations like Thailand, Global Blue data shows.

Ward declined to quantify the proportion of sales at the Knightsbridge store that is derived from U.S. tourists.

Jewelry is Harrods’ best-performing department, Ward said, as the store sells more 219,200-pound Van Cleef & Arpels Cyllene pearl necklaces.

About 100 areas of the store are being refitted each year as Qatar Holding LLC spends more on refurbishment than previous owner Mohamed Al-Fayed, Ward said.

Harrods is also trimming the number of middle-market fashion brands and giving more space to the “hottest” international brands such as Celine, Alaia and Saint Laurent, the executive said.

By: Sarah Shannon; Editors: Paul Jarvis, Robert Valpuesta and Celeste Perri.