How Fortnum & Mason’s ‘element of theatre’ has royally paid off

Three years ago, Fortnum & Mason boss Tom Athron warned the then-316-year-old grocer faced “significant challenges”. Losses had widened to £2.7m as the tourist trade dried up during the Covid-19 lockdowns, with the retailer facing a further 5% sales fall after onerous Brexit border controls forced it to pause EU exports.

Fast forward to its latest annual results and those struggles to be look well and truly in the past. Pre-tax profits grew 24% to £9.3m in the 12 months to 4 July, with turnover up 9% to £228m. This was topped by a stellar Christmas, with like-for-like store sales up 10%. Festive food sales grew 17%, with around 14% of that coming through volume growth after Fortnum’s limited price increases.

Those numbers look even more impressive considering the successes were was attributed almost entirely to its Piccadilly flagship and three satellite stores. Online sales actually fell 7% over Christmas after teething issues following a major consolidation of its supply chain last year -– more on that later.

So, why is the ‘royal’ grocer doing so well? 

There’s no doubt Fortnum’s business has been boosted as tourism has returned to almost pre-pandemic levels. But that ignores the fact that 70% of its up to 50,000 daily Christmas customers come from the UK.

Athron explains that Fortnum’s has worked very deliberately to maximise this anticipated growth, including relatively straightforward, but “quite significant” layout tweaks to improve the flow through its Piccadilly flagship store.

For example, it temporarily closed the Field Restaurant on the first floor to add more retail spaces and tills. It also shaved five seconds off payment times at its tills, through an update to remove the number of steps needed for a worker to process transactions.

The result, Athron said, was a 22% increase in transactions on the ground floor, with footfall up 11% overall. 

Retail theatre encourages year-round spending

Fortnum’s is a distinctly different retailer and has relied almost entirely on its distinct brand and elevated reputation as a destination to draw shoppers. While that presents many benefits, it’s “key strategic challenge” has been encouraging shoppers to spend outside the traditional seasonal gifting peaks.

The reported uptick in annual sales is a result of its work on that front too, notably through the expansion of its previously muted innovation efforts and growing exclusive third-party partnerships. Recent tie-ups include Stanley Tucci Cookware and TikTok bakery brand Get Baked, which have helped Fortnum’s attract a completely different type of customer.

“Third-party brands give us access to the latest products,” says Athron. “We haven’t got a massive NPD team, so by entering into collaborations we’re crowdsourcing NPD from across the country.”

It also continues to “double down” on hospitality and events following the renovation of its Piccadilly flagship’s third floor in 2023, expanding its programme of “big cheffy events,” cook-alongs and ‘In conversations’ talking about the UK food system – a topic Athron says has been pushed hard by board member Henry Dimbleby.

When the event kitchen is not in use, in-house chefs can be seen preparing patisserie or making pasta live for shoppers in store.

There’s no lack of ambition in its plans for 2025. In what is the biggest single investment into the store for two decades, Fortnum’s will build what it claims to be the only double helix staircase in the UK at Piccadilly.

Athron sums it up: “When you provide unique distinctive experiences, and an element of theatre you cannot find anywhere else, store retail does incredibly well.”

Online issues are ‘improving’

That might be true, but Fortnum’s still has plenty of work to do on its e-commerce offer. 2024 was the second consecutive Christmas where customers suffered issues with deliveries of its famous Christmas hamper.

Over the summer, the retailer consolidated four of its distribution centres into one e-commerce site in Corby, effectively doubling its supply chain capacity. However, the site is still suffering from staffing issues, prompting the “very deliberate” decision to limit orders to an amount it knew it could fulfil.

Athron insists the site is “improving every day now”, with demand “far exceeding” the availability for delivery slots. Online sales were up 4% in its full year before the Christmas slump, he highlights. 2025 will see further improvements to “localise” its international websites to make the most of events like Thanksgiving in the US.

Fortnum & Mason has a rich history. If it can maintain momentum, it faces a very happy future too, offering entertainment for shoppers and hope for retailers at a time when so many continue to face uncertain futures.