The bidding scramble at the 'house of brands'

The new arrival of Selfridges in Birmingham, UK, has heralded a remarkable change in the department store's image. Jon Ashworth reports

In early September, Birmingham's city centre was transformed by the arrival of a curvaceous building wrapped in what appears to be a chainmail coat. This is the first Midlands offshoot of Selfridges, a name not often associated with cutting-edge fashion.

The landmark building is clad in a metal and plaster skin studded with 15,000 anodised aluminium discs. Locals have already taken to calling it 'the boob tube'.

With its criss-crossing escalators (see inset photo), the interior looks like the cover of that memorable 1970s' record album, I Robot, by The Alan Parsons Project.

The Birmingham opening of Britain's fourth Selfridges - there are two more in Manchester - followed a decade of bewildering change at the group. In the early 1990s, a decision was taken to give the original Oxford Street store a makeover. The so-called Masterplan involved opening up the store to make it more accessible, with new escalators and improved facilities, including a bigger food hall.

It seems to have worked. The fresher look and easier access has translated into higher sales. But away from the shop floor, Selfridges - the company - has been subjected to more pushing and prodding than a prize cow at a county fair.

Selfridges opened in March 1909, some 60 years after Harrods, and cost £400,000 to build. Gordon Selfridge was a department store owner from Wisconsin who settled in the UK in 1901. The store had its own soda fountain and a 'Silence Room' with a sign reading 'Ladies will refrain from conversation'. A shoplifter was caught on the first day trying to steal an umbrella and walking stick.

Selfridge died in 1947. His old rival, Lord Woolton, the chairman of Lewis's stores, bought Selfridges in the early 1950s for £3.4m. The store changed hands again in 1965, when Sir Charles Clore's British Shoe Corporation paid £63m for a controlling interest in Lewis's.

By the early 1990s, when store planners embarked on their makeover, Selfridges was part of Sears, a company with interests ranging from shoes to sporting goods. Liam Strong, installed as chief executive in 1991, arrived from British Airways, where he was director of marketing and operations. Recession had taken its toll on Sears. Pre-tax profits, which peaked at £273m in 1988, had slumped to £147m by the time Strong appeared on the scene. Selfridges, with a book value at the time of £180m, could benefit from some aggressive brand promotion, he said.

The Oxford Street store was soon in the grip of a £100m refit. The effect has been to peel back the interior, creating sweeping vistas and improving customer flow. The four floors were redesigned to allow customers to see clearly from one side of the shop to the other.

The store had originally been developed in three phases between 1909 and 1934, resulting in haphazard growth. There was only one bank of escalators, making for huge tailbacks at busy periods. Only about 5% of shoppers ever made it to the top floor.

The Strong era saw cameo appearances by Philip Green, the BHS billionaire, who bought the Olympus Sport retail chain for a song, and Stephen Hinchliffe, the Facia founder, who snapped up nearly 400 Sears shoe shops. Facia subsequently collapsed, and Hinchliffe is currently behind bars.

By 1998, Strong had gone and Selfridges had been demerged from Sears to return to independent life on the stock market. The bid rumours started almost immediately, when British Land, the property group, built a 9% stake.

With its prime West End location and adjacent hotel, opened in 1970, the Oxford Street store made an attractive target for property speculators. But while the rumours swirled, the Selfridges management had other things on its mind.

With Strong's departure, Selfridges moved into what may come to be seen as its most triumphant phase. The credit goes to Vittorio Radice, previously at Habitat, who brought style and panache to Selfridges after taking over from Strong as chief executive.

By the time Radice took charge, the Selfridges redesign was well underway. Numerous architects and planners were involved in relocating departments to make the Oxford Street store layout more logical. A new catering manager was taken on to oversee the store's 14 restaurants and eateries, and preparations were made for a trendy new sushi bar.

The first store outside London opened in Manchester in late 1998, a first step towards diluting the Selfridges group's reliance on Oxford Street. The Manchester experiment proved a great success, and planners gave the go-ahead for the Birmingham site. Meanwhile, Radice was helping Selfridges cast off its rather dowdy image. In the spring of 2001, visitors to the flagship store were treated to displays by Japanese artists. In 2002, naked models draped themselves over the escalators as part of a mass photo-shoot. In 2004, there are plans for a huge Brazilian-themed promotion.

'We want to expose our customers to something new,' said Radice. 'We have been spending a lot of money remodelling the store and introducing new departments. Now it is time to do something more cultural, in a different dimension.'

By 2002, Selfridges was on a roll. After years of underinvestment, Radice had transformed the group into a highly profitable retailer backed by a valuable property portfolio. Profits had more than doubled in the three years since Radice became chief executive. Plans were afoot to add a further 100,000 sq ft of selling space along with an enlarged hotel and office block. A second store in Manchester followed, although the group continued to depend on Oxford Street for 80% of its business. There are plans for a fifth store in Glasgow.

Inevitably perhaps, Radice proved a victim of his own success. In February 2003, he jumped ship to Marks & Spencer, joining the main board as director in charge of homewares. His successor as chief executive, Peter Williams, the Selfridges finance director, was seen as a safe pair of hands to build on Radice's reforms.

If Williams thought he was in for a quiet life, he was sorely mistaken. Within weeks, Selfridges faced competing takeover bids from a colourful array of suitors. They included Tom Hunter, the Scottish entrepreneur, and Victor Tchenguiz, an Iranian-born property speculator. Williams weighed in with plans for a management buyout.

In the end, the spoils went to Galen Weston, a Canadian-based businessman whose late brother, Garry, ran Associated British Foods in the UK. He trumped the others with a £600m bid. Weston controls Holt Renfrew, an upmarket Canadian department store group, along with its Irish sister, Brown Thomas. He also has extensive interests in supermarkets and food distribution. The British Westons owned Fortnum & Mason and Heal's, bringing three famous London landmarks into the same family.

The bidding scramble was the talk of the summer of 2003. Since then, it's been business as usual for Williams and his team. The Westons pledged to leave Selfridges to run itself as an autonomous business. The company has slipped back into private ownership, joining a long list of retailers including Allders, Arcadia, BHS and Harvey Nichols.

Victorio Radice wanted to recreate Selfridges as 'the house of brands', providing variety and entertainment for English shoppers and tourists alike. 'What you want is the feeling you get when you walk down Bond Street,' he said. 'My vision is for people to come and spend the whole day in the place, buying or sightseeing. I don't mind. Even if they buy nothing, the shop is at its best when it's full of people.'

Things have certainly changed at Selfridges. The Birmingham skyline is proof of that.

Jon Ashworth is business features editor at The Times.