Concessions have long been the lifeblood of department stores and the industry in general has served up some compelling and surprising tie-ups lately.

Harrods has teamed up with yoga brand Lululemon, Next has added stationery chain Paperchase, Tesco has penned a partnership with Holland & Barrett and Selfridges has introduced variety store Flying Tiger Copenhagen at its Birmingham branch.

Retail Week looks at the reasons why department stores are adding a growing array of concessions to their stores.

Attracting new customers

Concessions are a great way to attract a new customer base to stores. At first glance, Selfridges and purveyors of trendy tat Flying Tiger Copenhagen might not seem like obvious bedfellows. However, the brand could attract a new, more cost-conscious shopper to the department store.

“Selfridges is capturing a new shopper with new more affordable products,” says Verdict Retail lead analyst Honor Strachan.

Debenhams has used its fashion concessions to attract a younger shopper into store. The department store group has added young fashion retailers Little Mistress and Bestseller-owned Only to its stores over the past 18 months.

“Younger customers are important for department stores, which by nature attract a family shopper. Debenhams has always managed to attract younger customers to its health and beauty department but not across the rest of the store,” says Strachan. “Its own-brand labels have not been reinvented for some time and are appealing to a more mature customer.”

Exclusivity

Tie-ups with brands that are new to the UK, online-only or have limited exposure on the high street gives a reason for shoppers to visit a department store. Recent examples include Selfridges, which has provided the first UK physical presence for etailers Etsy and Missguided last year. The department store also hosted H&M’s first homewares concession last year. 

Meanwhile, John Lewis has brought trendy womenswear etailer Finery to select branches this year and has gained kudos for its exclusive range with designer Alice Temperley. Trendy brand Superdry keeps shoppers flocking to House of Fraser with its exclusive concession.

Strengthen areas of weakness

Debenhams has added Sports Direct and Mothercare to it stores because sportswear and kidswear are categories in which the department store is lagging.

“Bringing in external specialists has allowed Debenhams to serve a niche market that its own brands were failing to reach,” says Strachan.

In a similar vein, Harrods brought Dixons into its Knightsbridge store in 2011 to boost its consumer electronics offering, while Tesco’s tie-up with Holland & Barrett came just months after it pulled the plug on its NutriCentre health and wellbeing business.

Improve dwell time

Concessions, particularly food and leisure partners, can keep customers in stores for longer, which can entice them to spend more.

Food has been a big expansion area for department stores over recent years. John Lewis has introduced Italian restaurant Rossopomodorro and juice bar Joe & The Juice into more than 10 stores last year and Debenhams has converted lower sales density areas into better performing eateries such as Costa and Ed’s Easy Diner.

The eating out market is high margin and shoppers who stay to eat are likely to make additional purchases. Debenhams’ departing chief executive Michael Sharp told Retail Week earlier this year that customers that eat at its stores spend 40% more.

Leisure concessions such as nail bars, hair salons and even spas, such as Urban Retreat at Harrods, Cowshed at Selfridges and Beyond Medispa in Harvey Nichols’ stores, also give shoppers another reason to visit store and an opportunity for cross-selling, particularly in health and beauty.

Capitalise on latest trends

Concessions offer an opportunity to add the latest hot products in-store. Lululemon will open a shop-in-shop at Harrods this month, allowing the department store to capitalise on the growing trend for athleisure.

“Athleisure is very current and lucrative – it’s outperforming the market and with the Olympics coming up we see that continuing. Harrods have brought one of the brands of the moment in this market into store,” says Strachan.

Using concessions to meet consumer demand for hot trends requires less investment from retailers and is less risky should today’s must-have product become tomorrow’s best-forgotten mistakes.

Theatre

A revolving array of concessions can add a big dollop of retail theatre to department stores. Changing concessions brings a constant stream of newness into store and keep shoppers excited.

“The premium and luxury guys like Harvey Nichols, Selfridges and Harrods do a great job of this. Every time shoppers come in there’s something different to see. Different products, different displays, different technology. It keeps the shopper interested,” says Strachan.

Selfridges also regularly rotates its in-store, often-themed, restaurants. The move keeps things fresh and creates a sense of urgency with Selfridges’ foodie shoppers snapping up reservations to dine.