Liberty has had its controlling stake owned by BlueGem sold for £300m – a significant mark up from its £32m acquisition of the business in 2010. Retail Week looks at what has made the luxury department store a success story and how it continues to brace itself against the backdrop of retail uncertainty.

While House of Fraser and Debenhams struggle to keep afloat, British heritage store Liberty London has defied department store doom and gloom. The retailer’s parent company BlueGem has sold its 40% stake in the business to private equity consortium Glendower Capital in a deal valuing the business at £300m.

The iconic retailer’s one-off 80,000 sq ft, six-floor, Tudor-style Great Marlborough Street store is the driving force behind its success.

Gensler global retail practice leader Lara Marrero says: “[Liberty] embraces its heritage really, really well. Not only is it embracing the building that it’s in, but it knows its roots.”

Liberty of London

Liberty’s iconic Tudor-style store in central London

Liberty founder Arthur Lasenby Liberty opened the smaller, original store on Regent Street in 1874 selling an assortment of items including art, clothing and fabrics. To this day the specialist store has a huge focus on its haberdashery department and own-brand items.

Marrero says Liberty’s authenticity is what makes it a success alongside offering a range of products with different price points so “anyone can buy there”.

“The [department stores] that have always had that level of authenticity and that level of service and programming are the ones that are surviving,” Marrero says.

And Liberty is doing more than just surviving.

The department store chain’s most recent results for the year to February 2018 saw sales rise 8% and pre-tax profit more than triple to nearly £7m, with over 60% of profits coming from own-label merchandise.

Selling a range of clothing, accessories and homeware in its famous Liberty of London prints has helped to drive the department store’s sales and sets it apart from other retailers.

GlobalData analyst Maureen Hinton says: “They produce very attractive products which, because of own-brand, you can’t get them anywhere else – and obviously you get a better margin on them.

“They really play to their strength in design and style, so they live up to the building in many ways and the heritage and they’ve done that well over the last few years.”

Alongside its fashion and homeware offerings, Liberty is full of experiential elements that Marrero says are specially curated and “aligned with their brand”.

A Maria Tash piercing salon, Taylor Taylor hairdresser and its range of eateries are just a few concessions attracting a wider range of customer.

“They are getting a completely different type of customer in there and now that they are there, they will also check out the other services and products on offer,” Marrero explains.

Taking liberties

RAH Advisory founder Richard Hyman says these are the types of areas other retailers such as Debenhams and House of Fraser are lacking and is a significant contributing factor to their lacklustre performances.

“A department store needs to inspire and be much less about needs-driven purchases and more about stimulation, wants and aspiration,” he says.

I liberty london new sleep lounge

Unique own-brand print designs set Liberty apart from other retailers

“Lots of retail business are under so much pressure they’ve lost sight of the ability to inspire - certainly the case with House of Fraser and Debenhams – they’ve moved backwards by cost and corner-cutting,” Hyman says.

Retail adviser and former executive at Harrods, House of Fraser and Saks Fifth Avenue Andrew Jennings says a keen understanding of its current and future customers, innovation and passionate staff are the factors setting Liberty apart from other department store retailers.

Hinton believes Liberty’s focus on the quality and range of its own-brand products is the key learning that other operators can take from Liberty’s success.

“Focusing on own-brand products is a good idea, as John Lewis is doing. If it’s unique there is more reason for people to buy from it and get a better margin,” she says.

“If you can create some sort of own brand or make your store its own brand it becomes a destination.”

Marrero looks to another British heritage brand for comparisons.

“One thing that Liberty has done is that it’s very authentic to who it is as a brand and Selfridges is doing the same thing by sticking to its heritage and curating,” she says.

‘A trophy business’

Liberty has faced its fair share of challenges throughout the years and posted positive EBITDA for the first time in 2010 after racking up a decade of losses.

Jennings says the department store retailer’s previous chief executive Ed Burstell, who was at the helm from 2008 until 2016, was the driving force that got Liberty on track again.

“For a long time, Liberty lost its way and then Ed Burstell came in. He was really the genius who really understood true speciality stores,” he says.

However, Hinton says focusing on its main asset – the building – and downsizing slightly by getting rid of the original Regent Street entrance was the key factor to Liberty getting its mojo back, alongside “focusing on products that are high margin and developing the online offer to run alongside it”.

Liberty’s unique proposition, from the Tudor-style building of its flagship and only store to its differentiated in-store experiences and strong heritage, make it what Jennings describes as a “trophy business”.

“It’s a business that’s manicured to the finest detail. The surroundings, the music, even the aroma in the store are special,” he says.

It is these elements that will set the store apart from its small number of competitors, and which its new owners will hope ensures there are plenty more chapters in Liberty’s success story.