Sharing space could become an increasingly popular move for retailers seeking to save costs and diversify their offer, experts and suppliers have said.
Last week Next debuted a concession at Tesco’s Surrey Quays Extra store. The 4,300 sq ft space stocks clothing from Next’s women’s and men’s wear ranges.
A spokesman for Next stressed the move was location specific, as Next had been looking for a standalone shop “for a while” in Surrey Quays. He added that there were no plans for a wider roll-out.
However, as costs continue to rise, and retailers struggle with surplus and underperforming floorspace, a “wave of consolidation” and space sharing is likely, predicted Lord Rose, chairman of Fat Face and former chairman of Marks & Spencer.
Rose told the 2018 World Retail Congress last week: “If you have too much capacity, and your costs are going up and your margins are going down, what do you do? There’s no price elasticity.”
Anusha Couttigane, senior analyst at Kantar Retail, agreed that greater numbers of retailers will open smaller shopping and lifestyle spaces within their stores: “It’s something we’ll be seeing more and more. It’s a way of creating an interesting store experience, and offering more. You have to give shoppers an excuse to stay on site.”
She added: “Partnerships don’t necessarily indicate a retailer is struggling – they can be powerful tools. Tesco will be conscious of protecting its own clothing brand [F&F] and be sure that, if other brands are introduced, they add a unique – not competitive – offer.”
Tesco already has Arcadia Group concessions in 25 stores.
One supplier agreed that the Next concession would not detract from F&F’s offering, as the newcomer attracts a “different” customer: “[Arcadia womenswear brand] Wallis went into Tesco and it had really good sales. It’s a good strategy.
He added: “I think it will do well – it completely resonates with the Tesco customers, but is higher quality.”
He agreed that space sharing was part of a wider trend, and a matter of creativity as well as necessity: “It is the way forward for a lot of retailers now. It’s happening more often – everyone’s doing it.”
Another supplier agreed it is a good way to expand business both for the company setting up shop and the one hosting it: “It’s cheap space – space Tesco can’t use – and at a reasonably competitive price for [Next].
“[Arcadia menswear brand] Burton has said how profitable [opening a shop within Tesco] was, as the space was charged at a low price. Tesco is hosting brands more expensive than [F&F], and it benefits them, as sales tend to go up.
“Debenhams is doing more and more of it, and it makes sense – it’s used up space and guaranteed rent. It’s win-win.”