Author: Claire di Noia, 22 January 2018

When I wrote my retail review for 2017, I added my three topics to watch in 2018: Concessions; upheaval in the Toy market and casualties in the Food and Beverage market place.

Today, I return to one of those insights as it gets less air-time in the press than the other two headlines and is actually the good news story; the format that is driving lots of retail growth currently – Store Concessions.

Store Concessions are nothing new; in fact the department store model pioneered the principle a century ago, although today these guys appear to be suffering more than other retail formats. Go back 10 to 20 years we have the Abbey National opening banks in Safeway stores, Laura Ashley in Homebase, even Boots stores in Sainsbury’s, whilst Big W and Woolworths offered clothing via Peacocks store in stores.

Abbey National at Safeway
Woolworths and Peacocks

The past five years saw another take on the concession format with larger companies operating bigger stores looking to maximise their return on space but retain control of the retail. So we saw the likes of Argos take space in Homebase stores, Tesco owning Harris + Hoole and Euphorium Bakery, B&Q offering Trade Point store-in-stores; all aimed at a slightly different customer and maximising sales from within the box. Some have, of course, worked better than others.

I have been watching concession announcements recently with interest as the format appears to be getting smaller, with compact high street stores introducing concessions as more and more companies look in this direction for sales growth or rental income. At the other end some of the larger stores still amaze me with some of their partnerships.

Starting with the larger stores, Tesco has jumped into bed with Currys (Milton Keynes and Northampton) – having visited both of these stores, they look and feel great for Currys and Tesco – whilst at Surrey Quays, Next has stepped in to share space with Tesco to mark a new direction for Tesco. Asda meanwhile has invited Decathlon into their spare space whilst Sainsbury’s add Argos and Habitat stores faster than many expected back in 2015 when they took over HRG.  This sits alongside a rolling programme adding Specsavers wherever possible.

Decathlon at Asda
EE at Argos

Moving on to the mid-sized stores, the news late last year that Dunelm would be opening Kiddicare concessions (which it now owns) in-store was a delight, whilst Argos has its concession programme underway inviting EE to share space in some of its larger stores.

I doubted that concessions would reach smaller stores but they have, with Poundland installing Pep&Co in-store, Maplin installing Game shop-in-shops and Superdrug trying their hand at concessions in the form of services via the instore ‘Beauty Studio’ to include nail bars, waxing booths and even a barber shop and hair salon in Fosse Park.

Pep & Co at Poundland
Beauty Studio by Superdrug

Concessions are clearly the way forward for many retailers; it is the best of both worlds on paper – the host should get a rental income and more footfall to offset lost sales of slow moving lines. The concession moves in much faster than a traditional retail property deal with no planning required and typically lower costs to shop-fit and staff.

Of course selecting the right partners for the marriage is not easy and a number have parted company after a short love affair such as Giraffe being bought in 2013 then sold off by Tesco only 3 years later. But analysis based upon location, customer and overlap with your existing network can help any relationship and that is where FSP can help as matchmaker. We can undertake accurate proximity analysis and venue screening which would include competitor and demographic analysis to help you identify the most suitable partners … think of us as cupid matching up companies looking for a long term romance!

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