From struggle to strategy: Industry experts unpack Harvey Nichols’ retail revival

Once a shining star of British luxury retail, Harvey Nichols has faced mounting challenges in recent years, grappling with shifting consumer habits, a fiercely competitive market, and a broader slowdown in the luxury sector. Now, the department store seeks to reclaim its former glory with plans to "transform" the business through a renewed focus on fashion, beauty, and hospitality.

TheIndustry.fashion takes an in-depth look at Harvey Nichols, featuring exclusive commentary on the challenges it faces and expert insights into how it might successfully navigate its transformation.

The origins of Harvey Nichols date back to 1831, when Benjamin Harvey opened a linen shop on the corner of Knightsbridge and Sloane Street in London. Though not yet bearing the name Harvey Nichols, this modest shop laid the foundation for what would become a renowned British luxury department store.

Ten years later, Harvey employed James Nichols, who became manager and later married Harvey's niece. Following the founder's death in 1850, his wife Anne took over the business and entered into a partnership with Nichols, forming Harvey Nichols & Co.

Over the years, as the business grew, Harvey Nichols expanded its offerings across fashion, accessories, beauty, food, and wine. In 1985, the store entered a new chapter with its acquisition by the Burton Group and continued to gain recognition for its curated selection of high-end fashion, beauty, and lifestyle products, becoming synonymous with the luxury shopping experience.

A further transformation came in 1991 when Harvey Nichols was acquired by entrepreneur Dickson Poon. The store underwent a significant refurbishment, most notably with the introduction of a restaurant, café, bar, and foodmarket on the fifth floor.

In 1996, Harvey Nichols embarked on a national expansion with the opening of its Leeds store, followed by the launch of its first international location in Riyadh, Saudi Arabia, in 2000.

Today, the department store business operates seven stores across the UK and Ireland, including five large-format locations in London, Edinburgh, Birmingham, Leeds, and Manchester, alongside two smaller-format stores in Bristol and Dublin. Internationally, Harvey Nichols has five large-format stores situated in Riyadh, Dubai, Hong Kong (two stores), and Kuwait.

Despite this extensive footprint, Harvey Nichols has encountered various of challenges in recent years that have impacted its profitability and prompted the need for strategic adjustments.

"Harvey Nichols has very much fallen off the radar in consumers’ minds. Its lack of investment and point-of-difference has seen it fall into the long grass of luxury retailers," industry commentator Marcus Jaye tells TheIndustry.fashion.

"The company's difficulties persist at a time when the luxury market is operating in a very challenging environment. However, the real tragedy is that for years, Harvey Nichols operated within a relatively benign, high-growth market - but failed to benefit from it. The business has been allowed to tread water for many, many years," adds retail expert Richard Hyman.

So, how is Harvey Nichols planning to reignite growth and attract customers? Recent reports indicate the retailer is undergoing a strategic shake-up - one that includes potential job cuts - as it looks to sharpen its focus on fashion, beauty, and hospitality.

Management has proposed a restructuring that could involve discontinuing several "non-core" areas of the business, including the potential shutdown of its own-brand food products, hampers, corporate food services, and its online food marketplace.

It forms part of a three-year transformation plan focused on restoring the retailer's status as a "British icon", with the goal of reaffirming its place at the forefront of luxury retail.

"It marks a clear signal that Harvey Nichols wants to carve out more relevance in the market, focusing on who it wants to be and who it wants to serve. The focus on fashion and beauty, categories core to its heritage, shows a desire to return to its roots," says consumer and retail trend analyst  Wizz Selvey.

Overseeing this transformation is Julia Goddard, who joined Harvey Nichols as Chief Executive Officer in June 2024 after almost 14 years at luxury fashion brand Alexander McQueen.

With the ambition to accelerate growth and reinforce Harvey Nichols’ position, Goddard and the wider team continue to implement initiatives aligned with the new strategic focus.

As part of this strategy - and alongside the discontinuation of several "non-core" areas - Harvey Nichols tells TheIndustry.fashion that significant changes include major refurbishments to its Knightsbridge flagship store aimed at enhancing the overall customer experience. It also plans to strengthen its selection of fashion and beauty brands, complemented by a "strong focus" on hospitality. In fact, it has already has secured 75 new fashion brands for 2025.

The business also recently confirmed the closure of its standalone Beauty Bazaar store in Liverpool - which first opened in 2012 - as part of its strategy to refocus on full-category stores.

A spokesperson for Harvey Nichols explains: "Harvey Nichols is undergoing a significant transformation. This involves major changes, including a substantial refurbishment of our Knightsbridge flagship store in London to significantly enhance the store’s attractiveness and customer experience.

"In line with this strategy and the focus on our core fashion and beauty edit, we are putting forward proposals regarding the non-core areas of our business and the restructuring of some of our teams. We are committed to supporting all affected employees through this transition and ensuring the long-term success of our business."

At the end of last year, Harvey Nichols also appointed Kate Phelan to the newly created role of Creative Director. Phelan is described as "a pivotal figure in the modern British fashion scene". Her career includes key positions at British Vogue - where she served as Fashion Director from 1993 to 2012 and continues as Senior Contributing Fashion Editor - and at Topshop, where she worked as Creative Director from 2011 to 2017.

In her role at Harvey Nichols, Phelan oversees the brand's campaigns and leads efforts to elevate its visual identity and creative direction.

"It is great that the department store business finally has a new, experienced team. They just need to be given the tools and money to turn this business around," shares Jaye. "Focussing on fashion and beauty is fine if you can offer something different or exclusive, but Harvey Nichols will be down the list for most must-have luxury brands deciding on a retail partner. It is competing with some very strong retailer brands."

"Harvey Nichols’ heyday was 30 years ago, and the people for whom it truly hit the spot - its core clientele- are now 30 years older," adds Hyman. "There are significant implications that come with this. How do you reignite the loyalty it once had? From a commercial standpoint, it’s almost certain that the brand will need to appeal to a whole new, younger cohort of customers as well.

"The new leadership team is now faced with two completely distinct customer groups, each with very different lifestyles. I believe the older customer segment is the easier market to target first. It needs to reignite the interest of its former core customers. Many of these long-time Harvey Nichols shoppers haven’t visited in five or even ten years. That makes it essential to focus on trading and creating a truly desirable offering.

"I’m not saying they shouldn’t try to attract younger customers - the main goal is to bring in customers. But if it's going to win back its former clientele, the messaging needs to be different from what would appeal to a younger audience. So, I think it has to prioritise one group - and the challenge with targeting the younger cohort first is that it requires a complete overhaul, as the name Harvey Nichols doesn’t mean much to them. You'd really have to start with a completely blank slate."

Agreeing with Hyman, Jaye highlights a key challenge: "What is the reason to shop at Harvey Nichols? For anyone over 40, there’s the Absolutely Fabulous nostalgia - but for younger customers, it’s a complete blank slate. You need to decide who your customer is and target them with focus. You can't be everything to everyone anymore."

Building on this perspective, Selvey also emphasises the need for clear positioning: "In today’s landscape, department stores can’t be everything to everyone, and Harvey Nichols is wise to stop trying. To win back customers, it needs to own a clear point of view.

"Selfridges and Harrods have taken bold steps with immersive experiences, exclusive brand collaborations and strong storytelling. Harvey Nichols now has an opportunity to differentiate by creating something more curated, more boutique, less about endless choice and more about being the place where you discover the best of what’s next."

Hyman suggests there are numerous strategies the retailer can pursue, including robust marketing efforts, brand development, and potential collaborations with influencers who resonate with the target audience. Meanwhile, Jaye emphasises that, first and foremost, Harvey Nichols simply needs to remind customers that it exists.

Selvey adds that the store should focus on offering fewer, better labels with genuine appeal, including under-the-radar or exclusive collections that resonate with fashion-forward shoppers. Beauty offerings, she suggests, must feel fresh, experiential, and tailored. Additionally, the emergence of a new kind of loyalty means customers are no longer just after cashback - they seek exclusive access to limited products, personal stylists, and insider events. She said this presents an opportunity for Harvey Nichols to further distinguish itself by cultivating deep emotional connections with its clientele.

"Transformation won’t be easy, but there’s an opportunity for Harvey Nichols to create something distinctive, modern, and profitable if it commits to becoming more focused and smarter about how it serves today’s luxury consumer," Selvey concludes.