The beauty and cosmetics industry is abuzz with Sephora’s announcement that it will be opening its flagship store in Westfield, London in March 2023.
The move demonstrates that “bricks-and-mortar” outlets still have relevance in the face of ever-increasing e-commerce pressures and, importantly, that physical stores are still exciting to consumers.
Sephora is not exactly a new player in the UK market. The business opened its first UK store in 2000 but, soon after, shut down its entire UK operation in 2005. It moved to acquire online retailer Feelunique in 2021 and the platform was absorbed into the Sephora business creating a UK online offering since October 2022.
However, the appeal of physical store locations appears to remain a key factor in Sephora’s UK retail strategy and it is not the only business in the industry with that focus. In the last few months alone: Space NK has unveiled its biggest store, at 25,000 sq ft at Westfield; Oh My Cream has taken the leap to launch debut UK stores; and Diptyque opened a flagship boutique in Sloane Street. The common theme across the brands is a focus on “customer experience”, not just product, and bricks-and-mortar outlets help retailers to increase that coveted in-person engagement.
Experiential retail is becoming increasingly significant to discerning consumers who want engagement and memorable shopping experiences, particularly in a post-pandemic world. Beauty retailers are well placed to thrive in this arena with the ability to offer the likes of treatment areas, make-overs, fragrance bars and customised products, all within the comfort of their own store. Lush has had great success with this strategy over the years, offering in-store treatments and product demonstrations as standard across its store portfolio.
In-store shopping also provides opportunities for the use of innovative technology, beyond just automated check-outs and inventory management. The use of skin-matching technology for skincare and cosmetics, or virtual try-on technology, are helping to make the customer’s experience more immersive and personalised, seeking to strengthen consumer loyalty and reduce returns waste.
Physical store locations provide an opportunity for businesses to tackle sustainability goals by offering product recycling schemes and refill options. We have recently seen multinational beauty company, Coty, seek patent protection for an in-store perfume blending refill station, and Harrods’ H beauty stores launch a pilot recycling scheme for traditionally non-recyclable products. The focus remains clearly on the importance of ESG in the Retail sector.
The start of 2023 has seen the news that big retail names are still investing in real estate for traditional shopping, with M&S recently announcing 20 new physical stores for their 2023/2024 financial year and Primark planning to open 27 new stores in 2023. Overall, it is clear that physical stores are highly relevant in the retail sector generally and will remain relevant to the beauty industry in particular. The key consideration is what type of physical outlet is most appropriate for your needs – from shared spaces to independent store fronts, pop-up stores to brand collaborations. There are many options available to explore, while still focusing on customer experience.
We will be following the development of Sephora’s UK business and the possible expansion of its property portfolio with interest, to see whether the new craving for experiential retail will afford the business greater success than its first venture into the UK market did.
If you would like to discuss options for acquiring or operating physical store locations for your business, then our Real Estate Team are able to provide all property related legal assistance.
