Typically, concessions are used by retailers to incorporate third party brands into their retail space and broaden the range of products on offer to their target consumers. For new entrants, opening a concession in an established retailer could be a less expensive route to market as established retailers often have prime retail space at rents which many new brands cannot afford.
The benefits of concessions are obvious; reduced rents allow the brand-owner the opportunity to market its products in a low-risk environment. The status of the 'host' store is likely to attract a constant and abundant footfall without the need for an advertising campaign or the recruitment of experienced sales staff. The 'host' store on the other hand can collect rents and a percentage of the total sales from the concession brand.
The Home Retail Group, which owns Argos and Homebase amongst others, has recently reported an increase in annual sales – and credits some of this success to its use of concessions in its Homebase stores.
It appears that these concessions are proving to be a successful way of introducing different brands within the group on a successful retail platform.
But this structure has other benefits for the Home Retail Group. Not only does it provide access to target markets for its sister brands, but it also provides a credible retail platform to resuscitate a struggling brand. Habitat, a store which was a victim of the recession, has flourished within the smaller and somewhat safer confines of larger Homebase stores.
It will be interesting to see, following the closure of many British highstreet brands in recent years, whether a trend will start to develop whereby these brands can be revived by parent or sister companies as concessions in larger and more profitable stores.