Harrods implemented a multi-phase strategic alignment of its information systems over 10 years to transform its business processes and customer experience. Phase 1 focused on improving reliability and service levels. Phase 2 consolidated back-office and front-office systems to gain efficiencies. Phase 3 introduced a flexible multi-channel architecture. Phase 4 moved to predictive analytics. Key customer initiatives included developing a single customer view, segmentation analysis, and a rewards program to better understand, anticipate, and inspire customer needs. Product, workforce, and performance optimizations were also undertaken to empower the future of the business.

1. How Harrods Understands, Anticipates and Inspires
its Customers
“Anything is Possible…”
David Llamas, Harrods

2. AGENDA
Introduction to Harrods
The Harrods Challenge
Harrods Information Systems Strategic Alignment
Customer Centric Initiatives
Empowering the Future
Lessons Learnt

3. The Harrods Challenge
RETAIL BUSINESS OUTLOOK OF 2002
RETAIL Issues
 Thin margins
 Competitive pressure RETAIL HARRODS
 Building loyal customers DRIVERS DRIVERS
 Multi-channel offering ANYTHING IS
HARRODS Issues POSSIBLE
 Product and process diversification
 Ultimate customer service
 Limited geographical expansion PROCESS
 Online opportunities for a Global Brand ISSUES
PROCESS Issues
 Business processes were slow and inefficient constraining the business scalability
 Systems were highly unreliable causing business disruption
 Information quality was poor and limited

4. Harrods Information Systems Strategic Alignment
PHASE 1 Overhaul of legacy systems – 4 years
Guarantee availability and reliability of service
 Improve IT Service Levels
 Infrastructure Refresh
PHASE 1 – Service Levels
2003 2004 2005 2006 2007 2008

5. Harrods Information Systems Strategic Alignment
PHASE 2 Back-office & front-office consolidation program – 4 years
Support scalability;
Improve productivity & control operating costs
 Operational Efficiencies
 IT Solutions Simplification Process
Simplification
Productivity
Cost Control
Scalability
PHASE 2 – Operational Excellence
PHASE 1 – Service Levels
2003 2004 2005 2006 2007 2008

6. Harrods Information Systems Strategic Alignment
PHASE 3 Introduction of a Flexible Multi-channel IT architecture – 2 years
Sustainable growth on multi-channel initiatives
 Provide a Flexible and Agile Systems Infrastructure
PHASE 3 – Flexibility & Agility
PHASE 2 – Operational Excellence
PHASE 1 – Service Levels
2003 2004 2005 2006 2007 2008

7. Harrods Information Systems Strategic Alignment
PHASE 4 Move from traditional reporting to the predictive enterprise – 3 years
Improve profitability and availability of product
Increase customer spend and optimize marketing expenditure
 Business Decision Making Optimization
PHASE 4 – Strategy Focused
PHASE 3 – Flexibility & Agility
PHASE 2 – Operational Excellence
PHASE 1 – Service Levels
2003 2004 2005 2006 2007 2008

8. AGENDA
Introduction to Harrods
The Harrods Challenge
Harrods Information Systems Strategic Alignment
Customer Centric Initiatives
Empowering the Future
Lessons Learnt

9. “Anything is Possible…”

10. The Harrods Customer Challenge
UNDERSTAND Our Customers
 Who are Our Customers?
 What, When, How, Why do they shop with us?

11. The Harrods Customer Challenge
ANTICIPATE Our Customers
 What can we do to ensure that our customers are retained?
 How can similar customers be attracted?
 How can the overall customer profitability be improved?
 How can the right customers be targeted at the right time with the most
appealing merchandise and marketing strategies?

12. The Harrods Customer Challenge
INSPIRE Our Customers
 Enhance the customer shopping experience and exceed their expectations

13. Customer Centric Strategies
Customer Information Management
 Data Quality issues… Recognize your Customer!
 How do we provide a UNIFIED Brand Experience across all
Channels… Information sharing
 Customer contact Strategy
Harrods Customer Segmentation
 What type of customers do we have?
 What are their preferences and shopping behaviors?
A more Personalised Customer Shopping Experience
 Harrods by invitation and personal shopping
 Clienteling
 Harrods Rewards Program

14. Customer Centric Strategies
Single Customer View is a pre-step to a robust multi-channel retail CRM
architecture… “Having a database of customer records is just data, having a
clean and accurate database of customer records is INFORMATION”

15. Customer Centric Strategies
Harrods Single Customer View Solution
Multiple
Channels
In-Store Call Centre Internet Customer Service Loyalty Station
Enterprise Service Bus
Data Management
Confirm Conform Compose Link
Data Analysis

16. Customer Centric Strategies Segment Distribution
Customer Groups 5.7%
6.4% Q
0.7%
UK Spenders
Jet-Set Elite 6.4%
33.6%
Q Quality-Seekers 4.6%
Bargain-Hunting Homemakers 6.1%
Wishful or Wistful
Teddies and Treats 0.6%
36.0%
UK Non Spenders
Share of Spend by Segment
 International 60%
Segment Size
50%
Middle East Customers % age of Spend
40%
Rest of World Customers
30%
Staff 20%
10%
0%
Q

17. Customer Centric Strategies
Desired Positions
Current
12
Staff
10
Jet-Set Elite
Number of Visit in 6 Months
8
6 Wishful or Wistful
Bargain Hunting
4 Homemakers Quality Seekers
2
Q
Teddies Middle East
& Treats
0
Rest of World
-2 UK Non-Spenders
-£200 £100 £0 £100 £200 £300 £400 £500 £600 £700 £800 £900 £1,000
Average Spend per Visit

18. Customer Centric Strategies
Harrods Rewards Program
One-to-one servicing
Tailored Products & Services
Black (By Appointment / Personal Shopping Services) Clienteling
Retain Most
Valued
Direct Mail / Clienteling
Customers
Exclusive invitations to store events
Gold
55% of sales are
(Introduce to “By Appointment”)
Product
Direct Mail CRM
Demographics System generated target offers Develop
Green
loyalty card based
(Sales Assc. / Rewards team) Customer
Behavioural
Relationships
Propensity modelling
Cross-Sell Analysis
Customer metrics
Retention Analysis Single Customer View Campaign results
Black Forecast reports
Prospect Pool Data Sources
Gold
Data quality
Rules / Prioritization Flexible design
Green
Analysis / Segmentation / Modeling Scalable architecture
Systems integration
Single Customer View / Marketing Analytics Data enrichment

19. Customer Centric Strategies
Rewards Program & Customer Segmentation Alignment
Tier Codes by Segment
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Q
Jet-Set Quality Bargain Wishful or Teddies UK Non- Middle Rest of Staff
Elite Seekers Hunting Wistful & Treats Spenders East World
Homemakers
Segment
Green 0 Green 1 Green 2 Gold Black Elite

20. AGENDA
Introduction to Harrods
The Harrods Challenge
Harrods Information Systems Strategic Alignment
Customer Centric Initiatives
Empowering the Future
Lessons Learnt

21. Empowering the Future
PRODUCT Centric Initiatives
 Selection
 Availability
 Profitability
Workforce Optimization Initiatives
 Task Scheduling
 Staff Scheduling
CORPORATE PERFORMANCE Management Optimization
 Continuous Improvement

22. AGENDA
Introduction to Harrods
The Harrods Challenge
Harrods Information Systems Strategic Alignment
Customer Centric Initiatives
Empowering the Future
Lessons Learnt

23. Lessons Learnt
 Get your Processes and Information Quality Right
 Evolution and not Revolution
 Do not Underestimate Change Management
 Continuously Evaluate your Strategic Partnerships

24. David Llamas
CIO
Harrods Ltd
david.llamas@harrods.com