Following today’s release of Fortnum & Mason FY figures for 2018/19, Emily Salter, retail analyst at GlobalData, a leading data and analytics company, comments: ‘‘Fortnum & Mason has delivered another year of strong sales growth, with revenue rising to £138m as its proposition proves to be the right cup of tea for shoppers. Though total revenue was bolstered by the opening of its new Royal Exchange restaurant in November 2018, it is clear that its premium and unique products enhanced by its strong British identity resonate well with domestic shoppers and tourists, even in the tough UK trading environment.
“The retailer reported strong international growth of 16% and 28% in Hong Kong and Japan respectively, and is set to open a new flagship branch in Hong Kong (encompassing a shop and restaurant) as its first standalone location in Asia. Though Fortnum & Mason is smart to reduce its reliance on the UK and capitalise upon international demand for British goods and the brand, it is debatable whether this is a wise move due to the protests and resulting recession that have dented the sales of premium and luxury brands in Hong Kong.
“Travel sites could be a significant channel of growth for Fortnum & Mason with the potential to open more locations, to capitalise upon tourists wishing to purchase last minute British gifts and souvenirs, as sales at the St Pancras store grew by 15% and its only other UK travel site is Heathrow Terminal 5. Online revenue growth also outperformed total growth, though it has significantly slowed versus FY2017/18. The retailer’s website is inspirational, especially for festive gifting, helping to boost sales, but though click & collect is free this will be inconvenient for the vast majority of shoppers given the limited number of stores, and standard home delivery is £5.95. Fortnum & Mason should reduce this cost and promote its more widely available third-party pickup option more clearly to drive further sales online, especially repeat orders.
“Fortnum & Mason is coming under increased pressure from premium department store competitors as Selfridges and Harrods are investing significantly in their stores. Harrods has restored its Food Halls, and Selfridges has renovated numerous areas of its flagship London location to boost footfall, as well as improving the experiential elements of its store, adding restaurants and a cinema. Fortnum & Mason is able to hold its own against these players, with its mix of traditional and innovative products as well as its food service proposition, but it must ensure that it keeps up with consumer expectations of a premium experience in its flagship Piccadilly store.”