Appendix F Beauty Concessions

Beauty operators who operate within retailers such as Boots, Debenhams, House of Fraser, and Harvey Nichols do so on a concession basis. In essence, beauty operators rent retail space within larger retailers. Rental agreements are generally fluid and can be from short-term monthly contracts to more long-term agreements with lease breaks. The capital expenditure for beauty concessions is generally low and the revenue received by beauty concessions can be significant. Usually such beauty operators will employ their own staff who have knowledge of their brand and a particular expertise. However, sometimes beauty concessions stands are staffed directly by employees of the larger retailer.

Most beauty concessions operators do not have their own standalone stores and do not have a lot of retail experience. It is therefore difficult to engage with beauty brands and secure their tenancy without a larger retailer acting as an anchor tenant. However, there are some beauty operators such as Mac & Estee Lauder with a strong enough brand to be able to operate out of their own standalone store.

Health and beauty has been one of the most resilient categories in retail in recent years and is expected to return to growth as the high street recovers from the Covid-19 pandemic. Physical retail is also the most popular channel for health & beauty purchases with in-store advice from a brand representative an integral part of a brands offer. Spend per head in the health and beauty category is highest amongst the 25 – 44-year-old age group, making this demographic a key target for a number of brands.17

Beauty retailers have also been seen to adapt adroitly to the Covid-19 pandemic in response to lockdown restrictions by offering online consultations. Credo Beauty and Deciem, for example, have partnered with live chat platform Hero to facilitate live virtual appointments for customers, enabling employees to deliver expert advice online. Online sales are predicted to account for over 23% of beauty and personal care spend by the end of 2021.18

However, notwithstanding the rise in online commerce, the physical shopping experience continues to be key to the health and beauty sector, as seen with NEXT and Harrods investing in the beauty side of its business.

In 2020, NEXT launched a new beauty concept ‘The Beauty Hall’ in five Hammerson destinations following the closure of Debenhams, with the aim of creating a premium retail environment for beauty to complement its beauty business. The Beauty Hall locations are Bullring & Grand Central Birmingham, The Oracle Reading, Highcross Leicester, Silverburn Glasgow, and Centrale in Croydon.

Harrods has opened two ‘H Beauty’ specialist stores in Essex and Milton Keynes. The stores stock over 90 brands across makeup, skincare, and fragrances, and feature masterclass and treatment zones and a champagne bar. The stores offer a new beauty experience and seek to make the Harrods experience accessible to a broader audience and demographic.

Beauty concessions have been a mainstay for high street department stores for decades. However, with the rise in e-commerce, stores which are out of touch with consumers needs and a desire for an all-encompassing shopping experience may be left behind. It may not be enough to simply offer a product. Stores that focus on human connections and memorable, immersive experiences such as those offered by NEXT and Harrods will be better placed to embrace changing consumer habits.

17 Global Data, The UK Health & Beauty Market 2018 – 2023 Report pg.64

18 https://econsultancy.com/covid-19impact-on-beauty-retail-experience/