Department store giants Next and Harrods have opened new beauty formats over the past month. Why launch a beauty store in the middle of a pandemic – when face masks are mandatory in many places – and can they shake up the industry?

Last month, Harrods unveiled a new store format that was a true departure from its central London retail emporium in Knightsbridge. 

The new store, called H Beauty, is housed in Intu’s Lakeside shopping centre in Essex, which Harrods head of beauty Mia Collins describes as “home to some of the UK’s most discerning beauty consumers”.

H beauty

Harrods opened H Beauty in Lakeside, Essex

The luxury department store chain plans to open another H Beauty format in Milton Keynes in the coming months – a location which may raise the artfully shaped eyebrows of their central London clientele. But it is not the only retailer looking to launch a beauty format in the London commuter town. 

Mid-market fashion retailer Next has pounced on a clutch of former Debenhams sites, including Milton Keynes and nearby Watford, to roll out its new Beauty & Home store format

The two stores, which opened last week, marked Next’s first move into bricks and mortar beauty following its online push into the category in recent years.

Next gifting

Next has opened its new format in former Debenhams sites

More Next Beauty stores are in the offing in locations including  Gateshead’s Metrocentre, Birmingham’s Bullring and Grand Central, The Oracle in Reading, Silverburn in Glasgow and Croydon’s Centrale centre.

Why now?

Against the backdrop of face coverings and social distancing in-store, launching a store that traditionally relies on one-on-one beauty consultations, testers and samples might seem like a fool’s errand.

According to data from Kantar Worldpanel’s beauty panel, total cosmetics spend was down 22.3% in the 12 weeks to July 26, however, this is an improvement from earlier in the year when the UK was in lockdown.

While Harrods’ move into the beauty market was in motion long before the pandemic hit, Next believed the opportunity of snapping up high quality retail real estate, which became available after Debenhams closed several stores following its administration earlier this year, outweighed the limitations of launching a new store during the coronavirus crisis.

Richard Cristofoli, Freeman’s chief customer officer and former Debenhams beauty managing director, suspects Next’s physical expansion into beauty could be designed to win more support from beauty brands for its online offer.

“Next could be harshly described as window dressing for a digital play,” he says. “This bricks and mortar move is about securing support from big brands, which will then enable them to secure brands online and sell them at scale digitally.”

Next Beauty and Home 3

Next Beauty has attracted big makeup brands

Floral Street founder Michelle Feeney, whose products are stocked in Harrods’ Lakeside branch and will be in Next’s upcoming Beauty & Home opening in Gateshead, agrees: “Up until now there haven’t been a lot of prestige beauty brands on Next and by getting the Debenhams’ [sites] they have sped up their access to those brands.

”Distribution channels are collapsing for a lot of the bigger beauty brands so this gives Next access to the Estée Lauders and the Jo Malones they might not have gotten otherwise.”

Next boss Lord Wolfson admits that online will be the biggest part of its beauty business.

“The Beauty Halls themselves is part of a much bigger drive in terms of building a beauty business. Last year we bought Fabled, which is a mainly online beauty business, and we now have 285 beauty brands on our website and we’ll be adding many more brands as the year progresses. 

“The Beauty Hall concept is 15,000 sq ft to 20,000 sq ft so that wouldn’t fit. The majority of our beauty business will be online. We saw continued growth during lockdown, 19% during lockdown, and it’s been growing about 60% over the last 13 weeks.”

Making Harrods more accessible

H beauty Kiehls and Gucci

Harrods H Beauty is more accessible to shoppers

Cristofoli says Harrods’ motivation lies in in the fact that beauty is one of the most resilient parts of the luxury department store during downturns because it drives greater shopper frequency and is more accessible than other categories such as fashion.

“There are many people who will never trade into luxury designer clothing who will buy into designer beauty. Many consumers will have an Armani perfume or Tom Ford lipstick but wouldn’t dream of buying their clothes,” he says

“This format means they can deliver the prestige of their brand to a much broader audience.”

Kantar analyst Anusha Couttigane also points to the locations Harrods has chosen as an indication of a pivot in terms of the type of customer they want to attract.

“Harrods is snapping up space in locations that are domestic destinations, not tourist hot spots. This play is about appealing to the home market with people who may have been commuting into London before lockdown and are now staying more local but still have money to spend. Harrods wants to tap into that aspirational shopper without relying on tourists having a day out in London or commuting  into town five times a week.”

Beauty halls in the age of Covid

How have Next and Harrods married the myriad social distancing requirements with offering a compelling in-store experience?

Understandably, the experience at Next Home & Beauty was quite clinical: one member of staff actually apologised as she tried to demonstrate what various lipstick shades would look like by using a variety of q-tips, and eventually pointed me to a Yves Saint Laurent mobile app where I could sample shades using augmented reality as I would not be able to do so on my face. 

Next minis

Next Beauty & Homes has a large ‘minis’ section so shoppers can buy sample-size products and try on at home

Next’s awareness of a beauty shopper’s hesitation to part with their cash before they see what a product looks like on them is apparent by the prominent ’minis’ section in the middle of the store, where shoppers could buy smaller (and cheaper) sample-size versions of products ranging from Korean avocado sheet masks from Oh K! for £4 to a Dermalogica pre-cleanse balm for £12.

Given the current restrictions on socialising, along with fewer people dressing up to go to the office, shoppers seemed to be staying away from makeup and focusing on skincare purchases in-store, perhaps to tackle the dreaded ‘maskne’ – aka face mask-induced acne.

Harrods had also bet big on minis in its store, though they are not as prominently located as Next’s centre-of-store section, and instead are arranged along the queue for the tills.

Harrods minis

Sample size products also play a role at Harrods’ H Beauty

The most striking thing when walking around H Beauty was how lively it was. Shoppers were getting product demos and having makeup applied by heavily PPE-d staff.

Harrods is clearly aware they need to inform shoppers it is still offering these services in the current climate, and has signage at the entrance of the shop advertising its makeup and skincare consultations.

A store assistant said there has been a good level of demand for these services.

H Beauty also has a  ‘playtable’ where shoppers can try products with help from staff.

The store offers testers to shoppers, though they are not on display and are distributed at staff discretion.

Offering something new

In many ways, Next and Harrods’ formats keep many of the trappings of the traditional beauty hall, combining heritage brands with more cult favourites.

The Next Beauty & Home store in Watford is fairly standard as beauty halls go with a strong mix of brands and concessions laid out in a grid format with a smattering of upmarket names like Chanel alongside many middle-market brands – Benefit, Bare Minerals and so on.

Cristofoli notes that Next’s Watford outpost, which is in a former Debenhams beauty hall of the future, looks “almost indistinguishable” from its predecessor. However, both formats have differences that make them stand out from other operators in the market.

Next Beauty and Home 5

Next’s new store also sells nightwear, lingerie, gifts and homewares 

However, there were a few things that made Next’s beauty hall stand out from the crowd. The retailer has clearly kept its customer – a mum who is feasibly looking to do as much of her shopping with as few store visits as possible – front of mind in this space and this shopper could pick up gifts for both herself and her family.

Next’s has combined its beauty offer with nightwear and loungewear in a bid to increase spend for shoppers who are looking for pampering products. The retailer also has a gifting department and was advertising its socially distanced bra-fitting service in its lingerie and accessories section.

There is also an entire floor dedicated to homewares. Wolfson says “the home and beauty offer sits quite nicely together” and the locations it is opening the new format will benefit from an expanded Next home offer. 

Couttigane believes the combination of categories could be a winning strategy for Next in the current climate.

“Next is under-indexed in beauty, which has been one of retail’s most resilient categories over the last decade, so this is a clever way for them to expand into a space that is still growing.

”If you think back to the last recession, home was also one of the categories people were spending money on as they switched moving house with making do and mending, and every indication of this pandemic so far shows that trend is likely to repeat. Therefore combining beauty and home under one roof could be a formula that will really woo customers.”

If Next is backing a depth of product range and categories to coax customers to spend, Harrods is sticking to true to form and betting on a one-of-a-kind experience to separate it from competitors – and the in-store atmosphere suggested this tactic seemed to be working. 

As well as a skincare station where shoppers can get facials in store and a play area where shoppers can trial make up looks, H Beauty also has a full champagne bar where shoppers can sip a glass of bubbly while indulging in retail therapy.

H beauty champagne bar  (2)

Experience is key at H Beauty where shoppers can enjoy a tipple at the champagne bar

“We always had ambition in our beauty halls of future at Debenhams to do a pop-up food and drink proposition but we couldn’t make it work,” says Cristofoli.

“Harrods has the operational expertise to deliver that kind of proposition, which indicates that outside of the Covid situation they are intent on creating a much more experiential shopping trip than the average beauty hall.”

Harrods has clearly attracted many big beauty names and cult favourites alike and boasts a large Charlotte Tilbury concession when you enter the shop along with areas for newer brands such as Huda Beauty, Hourglass and 111Skin.

Experts believe that innovations and experimentation with the beauty hall format is much needed in the UK, with international players like Ulta Beauty and Sephora offering a more exciting experience.

Feeney says: “They are taking this as an opportunity to look at what the future might look like in bricks and mortar in beauty, which is exciting and something I want to be part of.

”Both of them offer me [as a brand owner] a new customer, be it the beauty expertise and kudos that attracts people to Harrods or Next having earned their stripes with a big home customer who I’d like to know my brand better. Everything is up for grabs right now and you’ve got to be prepared to experiment and do things in a different way.”

Grabbing market share

But can Next and Harrods make waves in beauty?

Cristofoli believes because there are fewer players of scale in beauty than there are in other sectors like fashion, Next and Harrods could both steal a march and gain market share at pace – something that will be bad news for department stores like Debenhams, Marks & Spencer and John Lewis.

“The reality is chain department stores still account for a huge proportion of the prestige beauty market, so it’s not like its a highly competed for space like fashion, which has dissipated across a swathe of other businesses.”

Next Beauty and Home 2

Next Beauty & Home helps brands that are eager to have a new route to market

Cristofoli explains that big beauty brands have fewer distribution options for their ranges than fashion brands – a plight that has become even more apparent with the closures of Debenhams and House of Fraser stores. 

“Newer brands coming into the market also want all the alternative routes to market so these two new options will be received well by brands as well as shoppers. It is the legacy department store chains that have the most to lose,” he says.

Feeney is also confident both formats will resonate with shoppers.

“Marks & Spencer are clearly going after food more and John Lewis is assuming its customer will stay loyal, which is a big assumption right now. There is room for Next and Harrods,” she says.

“What’s brilliant about both is they are really partnering with brands. By hiring staff themselves but having brands train them they are both taking a multilayered approach, which is as much about making the store nice and giving customers what they want as it is being a collaborative partner to brands.

“Harrods offers me prestige and Next gives me broad market access with the quickness of their web offer and fulfilment to back it up.”

They may be different types of retailers but Harrods and Next are highly respected in their fields. The fact that both are diversifying their offer and betting on beauty as their next big growth opportunity should invigorate the whole sector.