As Chris Matthews reflects on a whirlwind two years since he became CEO of cruise retail specialist Harding+, the word ‘transformation’ peppers his conversation with us.
And with good reason. From sales of around £170 million the business almost doubled to £305 million in its 2024 financial year, with a return to ‘single-digit millions’ in profit a notable stand-out feature.
The full-year performance was supported by new contract wins, more direct-to-brand relationships replacing wholesale arrangements and what Harding+ terms “closer alignment with cruise line partners on guest experience strategies”.
Drilling down further, and the new-look Harding+ operation – and the results that followed – is the outcome of an 18-month programme that examined, reimagined and ultimately upgraded almost every aspect of the business.
Matthews says: “We are the only dedicated retail specialist at sea. It is all we do. And if you look at the customer dynamic at sea versus airports or elsewhere on land it is fundamentally different from a guest point.
“So our task was to redesign all of our systems and processes so we can get these right every single day for every single guest, whatever their itinerary is. We took the decision that we needed a really fearless guest transformation programme.
“We have been trying to become much more efficient, with many cost adjustments along with better sales and better margins, but always done in a guest-focused way.
“We introduced artificial intelligence into planning and forecasting, and we looked at logistics and supply chains so we can get goods to guests quicker than ever. We reduced sea pallet miles by 5 million last year, a huge number. One of the benefits of those system changes is that our availability is consistently above 90% on every single ship today.
“Wherever you are in the world, the guest experience has to be the same. We want to make the complexity of this sector a competitive advantage for Harding+. We believe we have done that with the investment in transformation we have made over the last two years. And with that return to profitability we can invest further now.”
With the infrastructure and ‘hardware’ elements now in place, the focus turns to improving the day-to-day guest experience onboard the ships, in partnership with cruise lines and with brand owners.
Matthews says: “We have made big investments in processes and in people. But the ultimate goal has to be how this all translates onboard the ships. That is where our focus is now and will be for the next couple of years, which is constantly about trialling and testing, based on our understanding of the guest.
“And changing the onboard ship environment with that in mind is really exciting.
“On average, a guest visits our shops 3.3 times a week during a one-week trip, and the dwell time is 45 minutes to an hour. There is no other retail environment that I’m aware of anywhere that has such dwell time for potential guests. The opportunity for brands to immersively engage with guests like this is unique to cruise. And we have a responsibility to deliver on that opportunity in what we do with our activations.”
CFO Simon Luscombe highlights the power of partner promotions to drive spends and transaction values.
“Onboard ship you have the chance to effectively test the same activity and the impact of your investment as a brand in a controlled environment. Week after week the ship does the same itinerary, and so you can really prove to a brand what returns look like.”
He cites Aperol tastings over the summer that saw brand sales increase +222%, Sun Bum pop-ups increased sales +340% and playful new store concepts such as Palm Pals saw sales triple. Harding+ said it is now dedicating one quarter of all onboard retail space for immersive experiences.
Luscombe adds: “With Palm Pals plush toys, where we decked out a small shop onboard a P&O shop, they forecast some ambitious numbers and we did three times over the plan. There are many ways to approach this channel, from traditional campaigns to shop takeovers, each of which can lead to big responses from guests.”
Matthews notes that while most of the hundreds of annual activations are planned months in advance, because of its recent systems investment, Harding+ can now react faster to trends.
“If we see something new, we can have it in the shops within weeks due to our speed to market. The message for new brands is that we are up for great ideas. And the brands that we work best with are the ones that get that cruise difference.
“If you look at the opportunity, CAGR growth in cruise passenger traffic is +7-9% a year, making this undoubtedly the fastest-growing long-term segment within travel. And the brands that wake up to that, and there are thankfully many of those, will see the benefits. But they have also got to understand that customers want experience, fun and personalisation, plus exclusives for a point of difference to land-based shops.”
For Harding+, like its peers in the channel, the question of how to integrate retail even more closely into the overall cruise experience is a key one, as Matthews acknowledges.
“From a guest point of view, the cruise experience is not differentiated by who they shop with or where the entertainment comes from. We are all part of the onboard experience. If they go into a bar and buy their favourite tipple, they expect to be able to buy it in the shop. So it’s about all partners working together to create cocktails or tasting events that resonate. And we are doing dramatically more of this activity this year than we were last year.”
Delivering newness is not only about product or category, it can be about reshaping the retail space.
Matthews says: “We tested some changes onboard both the Queen Anne and Sun Princess, trialling open spaces. That meant breaking down the traditional walls that you see in the retail environment so that you are welcoming guests into spaces where they want to be, and it’s also more fun and immersive. You will see this approach on more ships as they come out of dry docks in the years ahead.”
Luscombe adds: “We are looking at things anew, and the gift shop of old is now a retail experience that flows between different departments and allows customers to shop across categories.”
Cruise line partners also support a more immersive approach as they think about gaining greater share of wallet from the consumer journey.
Matthews says: “When shopping helps lift cruise satisfaction scores, naturally the cruise partners love it. You have trading uplift and everyone wins, and that is an important message for brands too.”
With store investment across the board, much of the business across categories is performing well.
Matthews says: “We have seen the growth of luxury over the last couple of years with, for example, pre-loved concepts in watches & jewellery. But on the other side of this spectrum, when we have renovated chocolate & sweet shops, we see the same growth. It’s our job to do something new and different that excites guests, no matter what the category.”
We return to Harding+’s technological transformation and the major digital and operational back-office developments that underpin front-of-house success.
Matthews says: “We have new tech solutions that can cover everything from stock intake right through to the shop floor. The reason why it is so interesting is that it eradicates wasted time for our ship-based colleagues. With 20-25% less administration time, they can spend more of their day on training and facing guests.”
Another newly deployed innovation is Sonar, a system developed by Harding+ to communicate with its onboard teams.
Luscombe says: “This creates a dialogue and a community. The teams can post about successful sales; they can tell us almost in real time what guests are saying and how they respond to what they see. It can be direct information that we can then use to support the brands and influence the next buying decision.”
Taking the connection to people further, Matthews cites the focus on the Harding+ Academy which provides training for every ship-based colleague.
“Our people are loyal to us and we want to be loyal to them. Investing in this side of that business is important to us.
“Colleagues across the business have now got a pathway from their first contract to become a manager. We want them to build up qualifications and skills that they can then take with them as they build their careers.”
As we conclude the conversation, we ask Matthews what success looks like in the years ahead, given the platform now in place at Harding+?
“We did a lot of soul-searching two years ago and have since been doubling down on that focus for Harding+ as being dedicated only to retail at sea,” he says.
“That has got us into place now where you see the results. We are making profits, trading is good and cash flow is good. And that is positive for our cruise line partners and for our vendor partners.
“This period has been about getting the business cooking, in an industry that has a tremendous outlook based on forward bookings.
“If we win some new contracts, that’s wonderful, but profitably gaining market share is what is important. My focus, much more significantly, is on improving the business that we have already got every single day.” ✈
This interview first appeared in The Moodie Davitt eZine, click here for access.
