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

04 Jan 2019

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Although the high street in some cases in declining, there are a number of brands who are thriving through this. 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.

Running your store on the high street

For many entrepreneurs, opening a store on the high street was always 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 has shown that in the UK alone, an average of 11 stores opened each day last in 2017; 16 closed each day, which excludes independent stores. 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.

Because of the news surrounding high street stores and their downfall, brands must begin considering all options that are available to them — to ensure any chance of survival.

Are concessions a viable solution for brands?

Once upon a time, only luxury brands were able to occupy a space within a department store, but smaller brands are getting a chance too. 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.

“What’s accelerating this change is that the standalone store model is no longer sustainable due to increases in payroll/rents and the lack of footfall on our high streets. And of course, the flight to online has left retailers with excess of space. What do you fill it with? Complementary brands” was one comment by former President and CEO of The Body Shop and Monsoon, Peter Ridler.

There are fewer risks when it comes to brands having 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.

Did you know that Ted Baker has a wholesale licensing and international model? Meaning there are much more concessions! In 2017, it announced a lift in sales and profit, whilst reporting to have 237 concessions around the world.

Concessions allow brands to generate greater exposure for themselves, and any new products they have on offer. 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.

Although many brands are losing out to online competitors, jumper dress retailers QUIZ continue to open new stores — but that’s not to say they aren’t occupying the online world too, take QUIZMAN for example, who has become a go-to retailer for men’s shirt and is solely based online.

Chief commercial officer at the fashion retailer, Sheraz Ramzan, said: “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.”

It’s believed that QUIZ’s success alone is due to its selling approach, as the brand has stand-alone stores, positions in department stores, franchises around the world and online. It looks like this multi-faceted strategy could be the way forward.

However, not all brands are in a position to set up 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.

There must be a genuine relationship between the concession and its host, though. 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.

Suitable research and plans must be in place so that the business can operate on a smaller level and within a more limited space. It’s not only beneficial to the brand implementing a concession, though. The model can also benefit the host store, as the process can help with rental costs and improve overall footfall.