Luxury beauty retailer Space NK has bucked the 2019 retail trend and delivered a robust set of results for the year ended March 2019, with a £6 million increase in revenues to £108.9 million.
While Space NK’s operating margin declined from 6.3 to 4.7%, the company’s domestic UK performance was particularly impressive, out-performing the wider UK health and beauty sector, which grew by just 1.8% in 2019.
The company, ranked Top50 in IRUK Top500 research, also saw strong digital growth for the period, thanks in part to the work done by new CEO – and former digital director – Andy Lightfoot, who moved to the new post in June with the remit of expanding its retail footprint and digital sales.
While growth has been strong online, however, the retailer faces growing competition from online pure-plays such as Feelunique and Cult Beauty, which continue to gain traction in the market, analysts warn.
According to Chloe Collins, Senior Retail Analyst at GlobalData: “To ensure its proposition is competitive, online fulfilment options should be enhanced by providing free delivery for its N.Dulge Deluxe loyalty scheme members, a later cut off time for next day delivery and third-party pickup options. As its same day delivery option within central London acts as a point of difference, it should extend this service to other major cities and promote it more heavily on social media to raise awareness.”
Collins continues: “With online pure-plays frequently discounting, Space NK must ensure it does not resort to similar promotional tactics, which would dampen the retailer’s premium image. To protect itself from price comparison and boost unique appeal, it should seek more exclusive brand partnerships, following its UK launch of Drunk Elephant in 2018.”
Upon Lightfoot’s promotion from group digital director to CEO in June 2019, he announced plans to continue expansion of Space NK’s UK store estate, which currently sits at 72 sites.
“Although the beauty specialist drives destination appeal through attentive customer service, a peaceful store environment, and engaging instore events, such as new collection showcases and new loyalty scheme member gatherings, further store openings should be approached cautiously as the UK high street continues to suffer and suitable sites in affluent locations are harder to find,” says Collins.
Space NK started with a single shop in London’s Covent Garden in 1993. Now it has 69 stores across the UK and Ireland and 41 in the US. It has also recently expanded to China through a combination of stores and digital.
It also recently added Adyen as a new payments provider as it looks to expand its business in the Asia Pacific and Chinese markets.
In its stores, customers can find what Space NK describes as “a finely-honed edit of the most innovative products in the beauty world”, from skincare and cosmetics to gadgets. They come from more than 70 brands, including Eve Lom, Laura Mercier and Nars.
Stores are staffed by trained make-up artists and specialists in skin and hair care who can advise customers on whether products and experiences will be right for their individual needs.