High Street Survival: Are Department Stores Allowing Brands To Grow?

High Street Survival: Are Department Stores Allowing Brands To Grow?

The high street has been in decline for the past few years, with many of our favourite brands going into administration. Although winter jumper’s retailer QUIZ are showing positive times, could this be down to the number of its concessions rather than physical stores? Read on, as we compare the success of concession stores with regular standing shops and discuss if one is more successful than the other and why.

Staying on the high street

For a lot of businesses, the high street is all they’ve known, so of course it will be their first choice. They’re in some of the biggest towns and cities and are therefore accessible to thousands of people each day. But, almost 6,000 stores closed on UK high streets in 2017, with many brands blaming the rise of internet shopping for their demise.

Research spanning across the UK’s top 500 towns found that an average of 11 stores opened each day in 2017, however did close — and that did not include independent shops. The report determined that it was the fashion and footwear stores that were hardest hit in 2017 and that spending in these areas had fallen by around 2% over the last two years.

People can no longer rely on the custom of high street shoppers, and therefore will need to look at alternatives.

Entering a concession

At one time, concessions were used by luxury brands —but today, they’re becoming a lucrative market for smaller businesses. A retail concession is basically a shop within a shop and it usually involves the process of one company selling its products in a host department store.

The dangers of being on the high street are reduced significantly with a concession. Rents are lower and there are fewer costs associated with dressing a concession stand than kitting out a full store. There are lower numbers of staff and footfall can increase because of the reputation of the department store or surrounding concessions.

Luxury brand Ted Baker introduced a wholesale licensing model that allows them to be in more concessions. In 2017, it announced a lift in sales and profit, whilst reporting to have 237 concessions around the world.

For brands looking to promote a certain product, concessions are a great way forward as you’re instantly in the eyes of your target market. When customers come over to the concession, their impressions of the new service can be judged before it is rolled out on a wider scale. One example of this was the Smartech concession in London’s Oxford Street Selfridges. Smartech expanded their concession space to showcase new tech products such as a robot that can serve coffee to visiting customers. Smartech is also a great example of how concessions can expand, similar to physical stores. This business started as a 7sqm Selfridges’ concession in 2016 before increasing its space to 100 sqm in 2018.

“Stores and concessions in the UK continue to play an important part in our strategy to expand QUIZ by driving sales, building awareness and showcasing the brand. Our stores not only showcase the brand and the product, but as a true omnichannel business model, the customer can shop in a way that suits them, whether that’s online, in-store or via concessions” was one comment by QUIZ’s Chief Commercial Officer, Sheraz Ramzan.

When reflecting on the brand, QUIZ actually uses a range of different platforms to sell its products, including ecommerce and concessions. It looks like this multi-faceted strategy could be the way forward.

However, it’s important to understand that not every business can open up in a concession. The customer of both the host department store and the concession must be similar and the product range must be appropriate. Visual merchandising is important to bear in mind too, as companies strive to get their concession noticed over others in the department store — although, it’s rare that these will be in direct competition with each other.

Iceland announced in August 2018 that it would begin to sell its frozen foods through concessions in The Range, for example. Talking about the partnership, The Range founder Chris Dawson said that the “exciting” partnership will give customers “access to over 80,000 different products under one roof”. It’s clear to see that the customers are still at the forefront of any strategic alliance.

Brands that try to become smaller to fit better within the concession model can be problematic. Suitable research and plans must be in place so that the business can operate on a smaller level and within a more limited space. The model can also benefit the host store, as the process can help with rental costs and improve overall footfall.

Sources

http://www.unibox.co.uk/news-inspiration/retail-concessions

https://www.theguardian.com/business/2018/apr/11/tough-year-high-street-internet-shopping-weak-pound

https://www.telegraph.co.uk/business/2017/03/23/ted-baker-defies-retail-gloom-rising-sales-profits/

https://www.linkedin.com/pulse/concession-stores-future-retail-stuart-hogg

https://www.investorschronicle.co.uk/shares/2017/09/25/boardroom-talk-quiz-clothing/

https://www.pwc.co.uk/press-room/press-releases/store-openings-at-lowest-level-in-seven-years-as-digital-demands-and-appetite-for-experiences-continue-to-redefine-british-high-streets.html

https://www.essentialretail.com/news/the-robots-are-coming-to-london/

https://www.retailgazette.co.uk/blog/2018/08/iceland-open-concessions-range/

 

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