British shoppers are very familiar with the concessionaire arrangements of major department stores; effectively the operation of 'shops within shops' which benefit all three parties involved - concessionaire, department store and also the shopper!
The benefit to the department store involves filling its available retail floor space with a renter that normally adds value to the store's overall sales proposition and also income to their bottom line in the form of rent and commissions. The concessionaire benefits from being able to operate in a readily prepared retail environment and with a guaranteed amount of footfall in the form of the store's shoppers and the customer also has greater choice; all under one roof.
Amongst major British department stores John Lewis stands almost alone as one that has resisted the urge to include concessionaires within their premises.
Done on strategic rather than for financial reasons, but for the majority of the rest it is a fine line between success and failure, involving a delicate balancing act on behalf of the store management.One department store whose undoing was in trying to allocate too much of its retail space to concessionaires was Bourne and Hollingsworth in Oxford Street. At the start of the 1980s its management made the decision to increase its concessionaires' ratio to 50% from 35%, but the plan backfired as the store lost its sense of identity and customers deserted the failing store in ever greater numbers forcing it to close permanently.
By way of contrast one department store that has found success with its concessionaires is Debenhams, which includes many different concessionaire arrangements within their premises, such as shoe retailers Faith, and fashion retailers Principles and Jane Norman amongst many others. All their concessionaire brands are strongly aligned to the values of the store itself and for shoppers there is a barely perceptible line between the two, meaning both are equally trusted.
So, for the majority of department stores operating in-store concessionaires is a fine balance between generating enough income from them to make it profitable and offering customers a greater choice yet at the same time still firmly retaining the store's individual brand identity.
If the delicate balance of fiscal propriety and brand image are achieved then department store concessionaires prove fruitful for all concerned. However, as seen in the case of now defunct Bourne and Hollingsworth if that balance is not achieved it can lead to rather spectacular failure!
Shops Within Shops - How Convenient For All Concerned!