Hindsight in 2020
In 1824, Charles Henry Harrod established his first venture in the south-east London borough of Southwark. Within a decade he had expanded his operation, which primarily dealt in cloth, to include wholesale groceries and by 1849, had opened a small shop near Hyde Park. In 1861, Charles Henry handed the reigns of the business to his son, who proceeded to refurbish and develop the newly acquired shop in Brompton where it diversified into retailing medicines, perfumes and stationery, while simultaneously gaining an enviable clientele that included the likes of Oscar Wilde, Sigmund Freud and members of the Royal family. Following a fire in 1883, Charles Digby Harrod took the opportunity to rebuild and expand his family’s business on a much grander scale.
Following a meeting with Edgar Cohen in 1889, Harrod agreed to sell his interest in the store for 120,000 thousand pounds, the equivalent of around 15.5 million pounds in today’s money, and after renaming the business ‘Harrod’s Stores Limited’, the new owners commissioned architect, Charles William Stephens to design a 1.1 million square feet department store, making it one of the largest retailers of its era, and today one of London’s most recognised attractions.
After exchanging hands several times, Qatar’s sovereign wealth fund purchased the world-famous department store from Mohamed al-Fayed for 1.5 billion pounds in May 2010 and with it, the intent to upgrade and maintain the landmark’s popularity with both the British people and tourists alike. As a high-profile investment into a valuable brand, not to mention five acres of prime Knightsbridge real estate, the purchase of Harrod’s wasn’t a bad one. The department store continues to sell goods and certainly London’s property prices have remained robust over the past decade, not taking into account the recent effects of the pandemic.
At roughly a similar age to Charles Henry Harrod, Jeff Bezos started his entrepreneurial journey from a small office in Bellevue, Washington in July 1994. Establishing an online marketplace, primarily for books, he expanded his offering to include electronics, software, video games, apparel, furniture, food, toys and jewellery and within just eleven years had exceeded Walmart as the most valuable retailer in the U.S by market capitalisation. Amazon’s meteoric rise continued over the next 15 years, and finally after four previous close calls, sealed its place in history as the fourth company ever to achieve a trillion-dollar valuation, joining the likes of Alphabet, Apple and Microsoft.
Needless to say, 1.5 billion pounds wouldn’t have closed such a prestigious, high-profile sale as Harrod’s, however the same investment in the department store’s technological competitor in the same year when shares were worth an average of 139.1404 and are now trading at 2,460.60 would be hard to beat. Conservatively, the same money could have bought a little over 16.5 million shares, resulting in a valuation today of just under $36bn.
If nothing else, the speed at which Bezos was able to develop Amazon by comparison to entrepreneurs such as Harrod is a perfect metaphor for the pace of our global economy and how quickly technology can bring disruptive change. While the signs of Amazon’s future success were relatively clear in terms of identifying future demand in tandem with developing trade mechanisms such as e-commerce, gaining a clear understanding of how technical adoption will interact with future systems will be the key to finding the next unicorn and more importantly, being able to strategically invest at cents on the dollar.
As a highly diversified ecosystem of businesses products and services, Amazon has truly become, “all things for all people, everywhere.” It isn’t of course without irony, that this remains Harrod’s motto to this day, (Omnia Omnibus Ubique).