Selfridges Plc Business Information, Profile, and History

Company Perspectives:

What makes us tick: When we opened, Gordon Selfridge said, 'Selfridges is for everyone.' That still rings true today, coupled with a desire to delight every customer who walks through our doors.

History of Selfridges Plc

One of the grand names in the history of the department store, Selfridges Plc has undergone a facelift in the late 1990s--not only has the company renovated its landmark Oxford Street, London location, but the company itself is undergoing a transformation. In 1997 the company was spun off from former parent Sears Plc (not to be confused with the United States' Sears Roebuck and Co.), taking a listing on the London stock exchange. Selfridges, led by CEO and former Habitat home furnishings chief Vittorio Radice, is also taking the company's famous name on the road. After opening a second store in Manchester, England, in 1998, the company has announced its intention to build up to three new Selfridges. The first of these is scheduled to open in Birmingham's revitalized Bull Ring district in 2003. The company is also looking for suitable locations in Glasgow and Newcastle. More than just a department store, Selfridges has long featured such amenities as a 300-room, four-star hotel; a parking garage with a car wash service; 15 restaurants; shoe shine, pharmacy, and other facilities, in addition to some 54 departments covering some 540,000 square feet of selling space. After spending close to £100 million on an extensive renovation of the Oxford Street flagship store, Selfridges has repositioned itself as a 'house of brands.' The company has also sharply improved its profitability, posting pre-tax profits of £27 million on sales of £360 million in 1999.

Founding a Department Store: 1909

Selfridges is the brainchild of famed retailer Harry Gordon Selfridge, an American who came to England at the turn of the century. Described as an instinctive retailer, Selfridge belongs to the era of such retailing greats as Marshall Field--indeed, Selfridge started his career with Field, Leitner & Co., which operated the famed Chicago-based department store chain. At Field, Leitner, Selfridge was credited with a number of firsts in the retailing industry. Selfridge proposed the concept of the January sale as a means of reducing stock left over from the holiday season. Selfridge also introduced the 'bargain basement' to the American shopper, and was later credited with the famous phrase: 'The customer is always right.'

However, Field, Leitner was not right for Selfridge. Denied a senior partnership with that company, Selfridge left his job and his country, moving to London at the age of 50. There he bought a piece of property on what was then the 'dead end' of Oxford Street, paying £400,000--by the beginning of the 21st century, that same property was valued at more than £324 million. Selfridge devised a logo for his new company by combining the symbols for the U.S. dollar and the British pound.

The Selfridge department store opened in 1909 and represented a revolution in British retailing. While the United Kingdom had been credited with developing the department store concept in the early part of the 19th century, by the turn of that century, British retailing was seen as largely trailing its more innovative counterparts in Europe and the United States. The Selfridge store helped to return England to the forefront of retailing technology. Considered the world's largest department store at the time, Selfridge offered more than simply shopping counters. Inside the huge complex, shoppers found such amenities as a post office, a library, rooms dedicated to foreign visitors, and a department dedicated to selling items for clergymen.

Selfridge, a keen marketer, also had a sense of the visual, adding window displays to the outside of the department store and a rooftop garden. Inside the store, shoppers were treated to lavish displays and decorations. In 1913, the store added another innovation, that of a nursery for caring for customers' children while they shopped. Selfridge also began offering Christmas puddings to the bus drivers operating the routes past the Oxford Street store, encouraging the buses to stop--and passengers to come into the store.

Buoyed by the store's success, Selfridge took the company public in 1921, and expanded its property holdings, giving the company one of the largest parcels of privately held land in the Oxford Street district of London. Later that same decade, Selfridge became the first department store in the world to open a department dedicated to a new invention: the television. Yet the lavish decorations and upscale trimmings that had made Selfridges one of England's most prominent retailers also became the company's heaviest burden. With the stock market crash of 1929 and the worldwide depression of the 1930s, Selfridges found itself in increasing difficulties. The outbreak of World War II only exacerbated the company's troubles. H. Gordon Selfridge was finally forced to sell his company, to Lewis's Investment Trust, for £3.4 million. Selfridge, however, was to die in poverty.

Slumbering Through the Decades

While Selfridges remained an Oxford Street landmark, it also became a symbol for the dowdy department store by the late 1980s. In the mid-1960s, Selfridges caught the eye of another fast-rising retailing magnate, and the store was sold to Charles Clore in 1965. Clore had been responsible for building up the British Shoe Corporation, as part of his Sears Plc retail empire. While Sears--unrelated to Sears Roebuck & Co. of the United States--built up its shoe division, which, by the late 1980s boasted more than 2,500 stores and accounted for one of every four pairs of shoes sold in the United Kingdom, it also began to invest in Selfridges. In the 1970s, Sears built the four-star Selfridge Hotel behind the department store, added a 500-car parking facility, and expanded its restaurant.

During this period, Selfridges also underwent a series of renovation attempts, which, in keeping with the fashion of the time, aimed to cover up the 'old-fashioned' features of the building in order to create a more modern appeal. This trend continued through the 1980s and into the 1990s, as Sears installed artificial ceilings and covered over such features as the huge solid bronze doors at the building's entrance, and removed much of its marble trim. Such decorative moves were nonetheless unable to counter the increasing association of 'dowdy' with the Selfridges name.

In the 1990s, Sears began a new round of investments in Selfridges, including expanding its retail floor space, extending its range of restaurants, adding personal shopping services and a beauty salon. Meanwhile, Sears was apparently neglecting its core British Shoe Corporation business. By the early 1990s, consumer shoe tastes and habits had changed, with people opting not only for sneakers instead of shoes, but also eschewing the small specialty shoe shops which made up the bulk of British Shoe Corporation's store chain in favor of buying their shoes in the same store they bought their clothing.

By the mid-1990s, Sears, once a dominant player in the United Kingdom retail market, had earned the prefix 'struggling.' The company seemed unable to counter its dwindling sales, despite successive reorganizations. By the second half of the 1990s, Sears' management saw no choice but to begin selling its holdings, including breaking up the British Shoe Corporation into its component brands to competitors. The company's Cable & Co. chain was purchased, for example, by the United States' Nine West.

By the time the last of British Shoe Corporation had been sold, Sears had managed to lose more than £240 million on the breakup. Meanwhile, the company, criticized for holding on to Selfridges while shedding its core shoe business, was having troubles there too. Its attempt to move beyond the London city center, notably with the opening of two new stores near Heathrow airport, first in 1995, with the second added in 1996, met with failure. The company was forced to abandon the Heathrow stores in 1997.

A New Look for the New Century

By then, Sears was forced to begin looking for ways to shed the rest of its holdings. In 1997, the company decided to spin off Selfridges, a move which was completed in 1998 when Selfridges returned to a separate listing on the London stock exchange . By then, Selfridges had brought in Vittorio Radice, who had previously worked wonders turning around the Habitat chain of home furnishings stores. Since joining Selfridges in 1996, Radice had already helped push through a massive seven-year, £100 million renovation plan meant to restore the Selfridges building to its previous splendor.

Radice also broke from Selfridges long identification with the single Oxford Street store when he announced plans to build a new £43 million store in Manchester, in the north of England. At one-third the size of the Oxford Street store, the new Selfridges was also moving out of town, to a new £600 million shopping complex. While some observers were initially skeptical about the company's chances at this new location, which opened in 1998, the Manchester Selfridges quickly outpaced its projections, turning profitable by the end of 1999.

The public listing had immediately attracted the attention of British Land Corporation, led by John Ritblatt, which began acquiring stock in Selfridges. From an early position of more than six percent, British Land built up shares worth more than 13 percent of Selfridge's stock by the end of the century. These moves fueled rumors that Selfridges might be taken over, or acquired outright. Radice, however, insisted on the company's determination to maintain its independence.

The renovation of the Selfridges store reached completion in 1999 and immediately proved its worth, as shoppers returned to the store in force, raising company profits and sales. As Radice pointed out to the Sunday Telegraph: 'Gordon Selfridge used to say this is not a store but a community centre. I believe this. It is not about selling goods but entertaining people.' At the same time as entertaining the store's customers, however, Radice also took steps to increase their likelihood of buying. Among the company's initiatives was the introduction of a 'house of brands' concept, separating departments into a collection of instore boutiques for such famed brand names as Gucci, Calvin Klein, and Yves Rocher. 'What you want is the feeling you get when you walk down Bond Street,' Radice told the Independent, 'You enter the Gucci store there or the Gucci space here and it is the same experience, the same ambience, staff with the same kind of knowledge of the product. But our big advantage is that here, if you want to return a Gucci jumper, you can pick up some Patrick Cox shoes instead.'

With sales rising to £360 million and profits doubling over the previous year to top £27 million in 1999, Selfridges turned buoyantly to the future. By then, the company had started construction on a third store, tagging some £40 million for a venue that would be part of the revitalization of the Birmingham Bull Ring district. Selfridges also announced its intention to expand to as many as five stores, with Glasgow and Newcastle among the company's top choices for its new locations. With the renovation of the Oxford Street store completed by the beginning of 2000, Selfridges immediately announced ambitious plans for that location as well. Seeking a real estate partner--with British Land among the favorites&mdashø provide financing and expertise, Radice announced plans for a radical new extension of the Oxford site. In addition to adding an additional 100,000 square feet of selling space, the new plans called for the construction of an office tower and residential complex above the site, as well as a new hotel and cinema.

Principal Competitors: Arcadia Group plc; Marks and Spencer p.l.c.; Debenhams Plc; Next Plc; Harrods; Sears PLC.

Chronology

• Key Dates:

• 1909: Harry Gordon Selfridge opens Oxford Street store.
• 1913: Adds nursery, window displays, and rooftop garden.
• 1921: Selfridges goes public.
• 1928: First dedicated television department.
• 1965: Acquisition by Sears Plc.
• 1970s:Adds four-star Selfridge Hotel and Food Hall.
• 1995: Opens first Heathrow Airport store; begins £100 million renovation of Oxford Street store.
• 1996: Opens second Heathrow Airport store.
• 1997: Closes both Heathrow stores.
• 1998: Selfridges spun off as public company; opens Manchester store.
• 1999: Oxford Street renovation completed; begins development of Birmingham store.
• 2000: Announces expansion plans for Oxford Street renovation.