The retail space will be used to launch a new brand, The Beauty Hall from Next. Further sites are under discussion.
Next currently sells more than 200 beauty brands, including Estée Lauder, Clinique, Benefit, Elemis, Burberry, By Terry, Rituals, on its website, Next.co.uk, and additionally premium brands such as Bobbi Brown, YSL, Lancôme and Nars on sister site Fabled.com, which it bought from Ocado last year.
Wolfson said the planned beauty halls would bring “our online business to life through premium store environments in some of the UK’s most important retail locations”. The aim is to open them as soon as possible, once Covid-19 restrictions have been lifted.
Next is not the first fashion retailer to dip its toes into the beauty hall concept. In October 2019, luxury London department store Harrods revealed that it would launch standalone beauty fascia H Beauty, which was expected to debut at Essex’s Intu Lakeside shopping centre in April before the coronavirus hit.
Harrods’ H Beauty fascia was due to be launched at Intu Lakeside in April
The 23,000 sq ft store was to be followed closely by a second in Milton Keynes, at a location yet to be revealed. It is not known whether these plans will still go ahead.
It is no surprise that these traditional retailers want a slice of the £430bn beauty industry, which has been growing at a rapid pace over the last few years. The global cosmetic market grew by 5.5% year on year in 2019, Statistica.com has reported.
Retail analytics provider Edited found that H&M UK’s assortment of beauty products almost doubled, increasing by 94.8% between 2018 and 2019. At the same time, luxury etailer Net-a-Porter began offering a wider beauty inventory, which increased by 26% in the same period.
However, this was all before coronavirus swept the nation.
Next’s expansion plan is a rare show of bullishness at a time when the high street is in crisis. Just last week Wolfson said the retailer could record losses this year of £150m – compared with a profit of almost £600m in 2019 – anticipating a drop in sales of as much as 40%.
David Atkins, Hammerson’s chief executive, reiterated Next’s blind bargain: “It’s a real vote of confidence in our flagship destinations that Next has chosen these locations to launch its new offer. This is a challenging time for all of us, so it’s encouraging to see strong, innovative brands like Next work with us to plan for the future.”
That Next is launching the concept in struggling shopping centres makes its strategy an even bolder one. Hundreds of retailers have stopped paying rent on stores closed by the coronavirus lockdown. Hammerson reported on 30 March it had collected just 37% of UK rent billed as of 27 March, compared with 57% that was paid by the same time in the previous year.
Shopping centres are likely to be one of the last non-essential shopping destinations to reopen after the coronavirus lockdown. Under Ireland’s reopening plans, shopping centres will be allowed to reopen on 10 August – a full two months after other non-essential retailers will be allowed to open on 8 June. Non-essential retail stores will begin to open from 1 June in the UK, but the timings for shopping centres, retail parks and independents have not been outlined yet.
When they do reopen, Next will be competing with Selfridges’ beauty hall in the Bullring and Grand Central in Birmingham, which houses some of the most coveted beauty lines such as La Mer, Guerlain and Le Labo, and boasts more than 30 counters. In the other Hammerson-owned shopping centres, including The Oracle in Reading, Highcross Leicester, Silverburn near Glasgow and Centrale in Croydon, there will be House of Fraser and John Lewis to contend with.
Several financial experts have repeatedly warned that now is not the time to invest in new and risky business. Many have advised that companies should stick to investments that can definitely make a profit from the crisis.
Although beauty buys are increasing online, Kantar’s Anusha Couttigane cautions that this is unlikely to be the case for bricks-and-mortar sales for some time. Restructuring firm Alvarez & Marsal predicts that fashion and beauty are set to have the most significant contractions in the retail market.
While non-essential stores could reopen over the next month or so, social-distancing measures – including the 2 metre rule – could prevent people from wanting to go shopping. This will have a huge long-term impact for businesses that require hands-on contact with consumers.
One of the biggest selling points of beauty stores is the ability to try products – or have a make-up artist or sales assistant apply them for you. As well as getting close to the customer, this can involve touching the eyes and mouth, and using brushes and other applicators. The health risks will require huge behavioural changes in the way beauty and make-up salespeople work.
Consumers are likely to buy online from fashion retailers who also sell cosmetics, such as Asos, Topshop, H&M and New Look, beauty-specific retailers such as Superdrug and Boots, or even purchase from supermarkets as part of their weekly food shop to minimise contact.
Next chief Lord Wolfson has said he will continue to invest through the crisis
Next said at the time of announcement that it is “working with its retail teams and brand partners to adapt these new stores to ensure that, when they open, they adhere to government social-distancing guidelines, and are safe for customers and colleagues”.
There are a whole host of reasons why this might not be a good strategy for Next. That said, the high street stalwart rarely gets it wrong.
Much of Next’s longstanding success is down to Wolfson, who has shown just how alive he is to retail’s challenges.
Thanks to his early embrace of the internet, the chain has increasingly more in common with online fashion pureplays such as Asos and Boohoo than it does with traditional bricks-and-mortar retailers.
He was also the first to publish a coronavirus “stress test” in March, and one of the first UK retailers to make public the steps Next had taken to mitigate against a no-deal Brexit.
In March, Wolfson poignantly stated the importance of continuing to invest in the business amid a crisis, and this just proves that he is a man of his word.
This will be a huge test for the retailer and the industry will be keeping a watchful eye. If it pays off, many will be wishing they had followed suit.
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