Luxury department store Fortnum & Mason is aiming to resume exports to Europe in summer 2023 and is in the process of opening its own infrastructure network on the continent in order to do so, CEO Tom Athron has told The Grocer.
The royal grocer was forced to end exports of its biscuits, jams, and hampers in March 2021 due to Brexit-related customs complexities that affected about half of its orders. At the time, orders from the Europe accounted for roughly 5% of total revenue.
Athron said that while the signs coming from government, particularly in relation to the Northern Ireland trade agreement, felt like they were moving in the right direction, “frankly it’s glacial”.
“We can’t wait for the government to establish better relations with the EU, and then relaunch,” he said. “We have to go sooner than that, because otherwise, our European customers will just forget who Fortnum’s is.”
The business is in the process of establishing a warehouse and its own infrastructure in Europe, though Athron declined to say where as negotiations were still ongoing.
“It’s easier to export food business to business, than it is business to customer,” he said. “Essentially, we will export to ourselves and then sell to customers from there.”
The business has also been working with one of its wholesale partners, German catering business Trabitsch, to offer a select range of 40 products to European customers. While the range available has been too small to measure real performance, the partnership has allowed the business to test whether exporting to the EU was workable.
The news comes alongside the publication of the company’s latest results on Monday, which show that Fortnum & Mason is back in the black. The ‘King’s Grocer’ made £6.1m profit in the 52 weeks to 10 July 2022, up from a £2.7m loss during the previous period.
Year-on-year turnover grew 42% to £187m – around £55m growth – during the period, which ended in the late Queen Elizabeth II’s Platinum Jubilee, a further boon to sales.
Significant investment in its e-commerce site, including into the user experience of its online checkout and website, as well as targeted social media campaigns, saw web sales grow 160% compared with pre-pandemic levels. However, a focus on quality meant this had been achieved without an impact in footfall, which was also up, Athron said.
A weak pound had driven international traffic and footfall from America and Europe, Athron said.
Total sales in the run-up to Christmas were up 8% compared with the previous year, in the five weeks to 25 December. For every £2 spent, £1 was online, with the business taking 350,000 orders worldwide.
Amid wider economic uncertainty, the company has seen greater demand for its biscuits, jam and honey than its hampers this year, as customers were thinking more carefully about how and where they spent their money, opting for “the luxury and the small things” over more expensive items, Athron said.
Staffing, particularly in hospitality and IT roles, had been a challenge, due to soaring wage inflation, Athron said.
The business has been largely protected from the global freight challenges faced by much of the sector, due to the fact it sources 85% of its products from the UK. However, it has seen prices rise by 5% to 10% across the board, which “to a degree” have been passed on to customers.
“The temptation is to value-engineer your products,” Athron said. “We will never compromise on the quality of the ingredients, in fact if anything I want us to go the other way.”
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