Revamped Queen's grocer has yet to reach 'pinnacle'

Fortnum's has occupied this Piccadilly site for 80 years.

As the months count down to Fortnum and Mason's 300th birthday celebrations, the Queen's grocer is having a £24 million ($73 million) overhaul.

One-third of the genteel Piccadilly department store is behind hoardings and, over the next year, entire floors will be ripped out and refitted. The only thing untouched will be the boardroom, with its country house furnishings and antiques.

This is the culmination of a rollercoaster 12 months for the upmarket corner shop. The July terrorist attacks last year led to a sales slump of between 20 and 30 per cent as tourists stayed away.

Then, in the week before Christmas, sales were up 70 per cent on the same period in 2004. The retailer couldn't keep up with demand for its famous food hampers and many customers were told they would not get them until after Christmas.

Six months on, with the overhaul in full swing, managing director Beverley Aspinall, 47, is in her element. As managing director of Peter Jones in Chelsea, part of the John Lewis group, she was involved in a £100 million, five-year refurbishment. So Fortnum's two-year project is no stretch.

She joined John Lewis in 1981 and worked her way through a series of management and buying roles until taking the Peter Jones job in 1997. She was persuaded to swap one prestige name for another after an approach from a headhunter.

"Fortnum's is such a fantastic brand - a bit of a dream ticket," she says. "It has great heritage and history and is well respected, but has not reached its pinnacle."

Founded in 1707, when William Fortnum, one of Queen Anne's footmen, took a room in the house of shopkeeper Hugh Mason and the two went into business together, Fortnum's was floated on the London market in 1939.

The British branch of the Weston family, the Irish-Canadian retailers, steadily bought stock in the business, taking full control in 2001. Jana Khayat, the granddaughter of Garfield Weston, was installed as chairwoman shortly afterwards.

"She looked at the company's long-term strategy and ways of growing the £40 million turnover," says Aspinall. "UK business had been buoyant but the board was not happy with the amount being sold internationally, particularly in Japan, where it had little control over its many wholesalers."

It ended a number of international relationships. "Withdrawing was a big step back in order to go forwards," says Aspinall. "What people perceive as having been a difficult time for Fortnum's - the last two to three years - was while this new strategy got under way. It was painful."

The company now trades with a smaller group of partners and, in 2004, Fortnum and Mason Japan was set up as a Tokyo-based joint venture. International business comprises 10 per cent of sales.

In rebuilding the Piccadilly store, Fortnum's home for the past 80 years, Aspinall must find a balance between increasing sales and profits and staying true to the brand's heritage.

"You have to be careful to retain the best of what you have and move it gently forward, without throwing out your strengths," she says. Her plan is to shift away from being a department store and focus on four core areas: food, wine, entertaining and "celebration", otherwise known as gifts.

Most famous for its food hall, Fortnum's has suffered over the years for being more a tourist draw than the sort of store Londoners would use regularly. Aspinall is trying to address this by increasing the amount of fresh food on offer.

Not everyone is happy with Aspinall's plans, with customers upset that old stalwarts such as fashion and hairdressing have been closed.

A huge percentage of the customers never get out of the food hall and off the ground floor. To put this right, an atrium is being built as a central connection between the floors and new signs are being fitted.

She is also confident that Fortnum's won't have a repeat of Christmas 2005 when, despite the enduring popularity of its hampers, the enormous uplift in demand took the store by surprise.

The internet is another growing area but not one that Aspinall is marketing aggressively.

The big question for Aspinall, however, is whether her plans to lure in not just tourists and grande dames but a new range of urbanites will bear fruit. Because if they don't, the future of the Queen's grocer is by no means guaranteed.

- INDEPENDENT