Overview
Fortnum & Mason is a 300-year-old fine food and gift retailer which has been undergoing a period of dynamic change.
It has had a clear focus on digital development over the past few years and relaunched its website in 2020 in a bid to improve the customer experience and accelerate international sales. Investment in digital marketing has been another priority.
The upmarket retailer also operates two travel stores and a satellite store in London as part of its strategy to become less reliant on the iconic Piccadilly flagship.
Fortnum & Mason’s strategy for forward growth is focused on providing an exceptional customer experience through all its channels and continuing to develop its product offering.
Under former boss Ewan Venters, the gift element of the offer was extended, building up a good story around its traditional British heritage.
New five-year strategy from 2022
Chief executive Tom Athron has been at the helm since 2020, following Venters’ departure. Athron outlined a new five-year strategy in April 2022 with its mission to “make joy”.
The strategy has five key business priorities:
- Reassert its strength in “extraordinary food, drink and joy-giving things”
- Know, host and serve its customers brilliantly
- Bring Future Matters (the retailer’s corporate responsibility and sustainability strategy) into the heart of its decision making
- Prioritise investment in digital transformation
- Build the global brand with Piccadilly at its heart
Developing the digital side of things has also been key as part of its commitment to becoming a fully multichannel retailer and Fortnum & Mason has been ploughing ahead with its digital transformation programme. Perhaps contrary to expectations given its traditional stance, Fortnum & Mason had a good head start on this, having had a well-established traditional mail order hamper business to build on.
The retailer relaunched its website in August 2020 in a bid to improve the customer experience and grow international sales. This stood the business in good stead to benefit from the accelerated transition to online shopping during the pandemic.
Refurbishment completed but upgrades of individual departments remain ongoing
While it took its toll on the balance sheet for an extended period, the refocusing of the Piccadilly store as a fine food and gift emporium over the second half of the 2000s has been something of a masterstroke. It gave the Fortnum & Mason brand, which had arguably been overshadowed by the higher-profile Harrods and Selfridges, a unique proposition from which it has been able to roll out a series of high-profile satellite stores in key locations.
The Piccadilly store had suffered the same problem as all the capital’s iconic flagships over the years in terms of lack of scope for expansion. While the £31m refurbishment programme of the Fortnum & Mason flagship would have resulted in some extension to the sales area, the constraints of the building meant that this would have been no more than 5% or so.
In line with its flagship status, the Piccadilly store is subject to ongoing investment in order to keep it fresh and add interest. The store features a large fresh food department and five restaurants to provide a luxurious experience and encourage repeat visits.
The third floor of the Piccadilly flagship was relaunched in March 2023 with a new Food and Drink Studio concept where the retailer will host cooking workshops and demonstrations for customers as well as operating a retail space.
Fortnum & Mason Food and Drink Studio
Set within retractable glass walls on the third floor, the space will host more than 100 of the retailer’s chefs, who can use its facilities to come up with new recipes to supply the store.
The design allows the space to be used as a hybrid kitchen studio, which will create food and drink content for social media, TV and podcasts.
The shop floor features a copper still, named Amalthea, from which customers can choose a Made in Piccadilly London dry or pink gin and watch the bottling process, as well as shop seasonal options, tinctures and essences.
Elsewhere, there is a section dedicated to the brand’s bestselling hamper selection with new personalisation options and a Cook Shop, which features a selection of ingredients, utensils, cookware and cookbooks.
Fortnum says the space was created using “the latest thinking in circular design”, prioritising the use of sustainable materials and construction methods.
The renovated floor combines the department store’s historic charm with future-focused sustainable materials and construction methods, including bio leather, terrazzo shelving made from waste wood and plastic retail tables made from recycled yoghurt pots.
The smaller travel stores also have a catering offer at their heart, with a tea salon originally taking up a significant part of the floorspace at St Pancras. The St Pancras store was extended in November 2019, however.
A champagne bar was introduced to the Heathrow store a few months after it was opened. Not only does this encourage dwell time, but it also gives passengers the opportunity to try products while they are waiting.
Subscription launch
The retailer launched ‘Fortnum’s Dispatch’ – its new subscription service – in July 2024.
Customers can choose from a trio of subscriptions across tea and biscuits, choosing the frequency depending on which of the three they choose.
The Tea Post offers customers a choice of loose-leaf tea blends while The Biscuit Post offers refills on some of Fortnum’s most popular biscuits. Customers can also select The Teatime Dispatch – which offers both tea and biscuits.
Travel hubs, stores and restaurants
Future growth for the business is being seen very much at a global level. The two UK satellite stores at important London transport hubs have extended the retailer’s reach to further domestic and international customers who may then also be encouraged to visit its flagship store for a larger product offering. The company already had a presence at most of the UK’s major airports through concept areas in partnership with World Duty Free shops.
In-store restaurants and tea salons remain an important part of the retail business, providing customers with the opportunity to sample Fortnum & Mason products. In addition, the retailer has a prestigious standalone restaurant in St James’s in London (45 Jermyn Street).
Fortnum & Mason extended its retail and dining space in the capital in 2018 through a new opening at the Royal Exchange towards the end of the year, offering a range of its best-selling food lines and iconic hampers. The store also features a dining experience style upmarket restaurant and bar.
Its satellite store at St Pancras was extended towards the end of 2019.
Accelerating international sales
Fortnum & Mason relaunched its website in August 2020 in a bid to improve the customer experience and accelerate international sales which has been a key focus of late. The site includes shopping options in multiple international currencies – Canadian, US and Kong Kong dollars – as well as sterling.
While deliveries to Europe had to be halted temporarily following Brexit, the retailer launched a dedicated EU website towards the end of 2023, enabling it to cater for customers in the trade bloc once again in the wake of post-Brexit challenges. EU deliveries had accounted for 15% of Fortnum’s online sales ahead of Brexit.
The upmarket retailer now delivers to 15 EU countries, including France and Germany, from a recently opened fulfilment centre in Belgium, which management says will allow it to offer a “consistent and reliable service” to EU shoppers.
In mid-2022 Fortnum & Mason announced a partnership with ecommerce accelerator Pattern to expand its online operations to China through the launch of a store on cross-border online marketplace Tmall Global. The store features an edit of the retailer’s most famous products including teas, biscuits, wines and spirits, teaware and wicker hampers.
Evolving overseas expansion
Further international development is central to Fortnum & Mason’s strategy for growth. The company has extensive wholesale agreements overseas, but there was little expansion on this front under former boss Ewan Venters.
In November 2019, however, the retailer opened its first Asian flagship in the K11 Musea development in Hong Kong. The 7,000 sq ft store includes a restaurant with panoramic views across the harbour and builds on its established partnership with department store retailer Lane Crawford in Hong Kong. This is one of several partnerships for the brand across Asia, including Isetan Mitsukoshi in Japan and, more recently, Shinsegae in South Korea.
The flagship store opening suggests a potential shift in strategy for overseas expansion after the retailer closed down its first international standalone store in Dubai in 2017 after only three years. This had been operated under franchise by Al Khayyat Investments.
Indeed, management hinted at the end of 2021 that further international developments could be on the cards before too long and in early 2022 was reported to be in talks with potential franchise partners in Qatar amid growing interest from international brands in the Gulf ahead of this year’s football World Cup.
A spokesman for Fortnum & Mason said: “As part of our strategy, we are exploring opportunities to expand both online and internationally, the Gulf being a region we’d like to look at again.”
Fortnum & Mason retains a strong presence in Australia, where it trades through around 30 David Jones stores, as well as in Canada where it has a presence in seven Holt Renfrew stores in early 2023. It also trades across seven El Palacio department stores in Mexico.
The group also has an online presence across North America via williams-sonoma.com.
In Asia, it has a presence in around 15 Japanese department stores, primarily Mitsukoshi outlets, although that total has been declining of late.
Its Lane Crawford partnership covers four in-store units across the department store network in Hong Kong.
Closer to home, Fortnum & Mason is represented in several leading European department stores including Le Bon Marché in Paris, Jelmoli in Switzerland, KaDeWe in Berlin and Brown Thomas in the Republic of Ireland.
Technology strategy
Fortnum & Mason invested heavily in talent and technology under former boss Ewan Venters and the retailer has been forging ahead with its digital transformation programme. A key aim of its transformation project is to drive international growth.
An overhaul of its supply chain operations was kicked off in 2019, resulting in the implementation of a new ERP system and the introduction of new till points in stores, which allow staff to arrange international delivery from every point of sale. The overhaul also included a new business intelligence solution.
It is also vying to gain a single view of its customers.
It implemented Rant and Rave’s ‘Fast Feedback’ system to improve visibility of customer engagement across the business in 2017. The technology allows for customer feedback, both online and in-store, to be captured and analysed before being presented on a customisable dashboard.
The retailer is then able to respond to feedback in real-time, enhancing the customer experience.
Supply chain capability bolstered
A surge in demand for its products during Christmas 2023 put the retailer under some pressure, now planning to a new “consolidated” 400,000 sq ft distribution centre in Northamptonshire during 2024.
