Retail groups Next and Frasers are set to go head to head for control of Harvey Nichols, as the Hong Kong-owned department store begins taking bids from British suitors later on Tuesday.

The Knightsbridge-headquartered chain was put up for sale last month by its owner, Hong Kong billionaire Sir Dickson Poon, and is seeking a buyer capable of upgrading its store estate and supporting international expansion.

Harvey Nichols has given interested British bidders until the end of Tuesday to submit final takeover offers, City AM understands.

Overseas bidders are also circling, but their process is being handled separately and is running slightly behind the talks with UK suitors.

Next and Frasers’ interest, first reported by Sky News, could set two very different high street operators against each other.

For FTSE 100 retailer Next, the logic is relatively clear. Under chief executive Lord Simon Wolfson, the company has spent years acquiring high street brands and has said it intends to continue doing so.

In January, Next bought footwear brand Russell & Bromley for £2.5m. That followed a years-long acquisition spree that also included vintage-inspired retailer Cath Kidston and upmarket clothing brand Joules.

Next could gain access to luxury shoppers

A purchase of Harvey Nichols would “extend [Next’s] successful brand portfolio strategy and bring access to a more affluent customer base,” retail analyst Nicholas Found said.

Although Next’s recent acquisitions have been positioned at the higher end of the high street, Harvey Nichols would represent a further step up, he added. “Luxury retail requires theatre, hospitality and high-touch service beyond its usual operating model.”

Analysts also said Next could use its “total platform” system, which provides online logistics and marketing support to third-party brands, to improve Harvey Nichols’ limited online presence.

Next declined to comment.

If Frasers Group follows through with its widely tipped move for Harvey Nichols, billionaire founder Mike Ashley will hope to make the department store the latest battleground in his push into high-end fashion.

The FTSE 250 company has built a reputation for aggressive attempts to gain control of rival retailers through large shareholdings and demands for board representation.

Its entry into the Harvey Nichols auction reportedly caused concern among some of the department store’s suppliers, although chief executive Michael Murray told City AM their objections were “nonsense rumours”.

Ashley, who built Sports Direct around affordable sportswear, has in recent years sought to expand further into luxury fashion through Flannels, the designer brand owned by his group.

Ashley’s Frasers pushes further upmarket

More recently, Frasers has stepped up pressure on German fashion house Hugo Boss to accept its unsolicited £1.7bn takeover offer. According to The Times, the group is also backing Murray — Ashley’s son-in-law — to become Hugo Boss chief executive.

Found said Flannels would provide a “strong strategic fit” for Harvey Nichols. He added that the department store could “become the flagship of [Frasers’s] elevation strategy, although brands will want clear safeguards around distribution, discounting and the independence of the Harvey Nichols brand”.

Frasers declined to comment.

The two established retailers could also face unexpected competition from Modella Capital.

The Mayfair-based private equity firm was founded only in 2022 but has quickly become active on the high street, acquiring struggling names including Claire’s Accessories and WH Smith’s retail estate.

Claire’s Accessories fell into administration soon after Modella bought it, while the firm this month pushed through a controversial restructuring plan that it said was needed to save its WH Smith stores — now renamed TG Jones — at the expense of up to 150 sites.

However, sources familiar with the matter said Modella is considered less likely than Frasers and Next to make a final bid, after reports that Harvey Nichols is seeking a £60m commitment to turn around the business.

“[Next] is far better suited to scale the business than a traditional turnaround player like Modella Capital, and Modella are unlikely to invest anything like the money Harvey Nichols need anyway,” independent retail analyst Jonathan De Mello said.

Modella Capital declined to comment.

Harvey Nichols is expected to choose its new owner towards the end of next week, according to sources familiar with the auction process.

The department store, which became widely known through its association with the 1990s sitcom Absolutely Fabulous, has struggled in recent years to compete with Harrods and Selfridges. That makes the sale a test not just of price, but of which bidder can credibly support the kind of store investment, digital improvement and brand positioning that luxury department store retail now demands.

It is understood that Harvey Nichols’ leadership will favour a bidder willing to commit to upgrading its Edinburgh store in line with recent refurbishments at the Knightsbridge flagship, while also improving its international and online presence.

Harvey Nichols declined to comment.