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SPACE TRAVEL

BRITISH BEAUTY CHAIN SPACE NK IS VENTURING INTO INTERNATIONAL TERRITORY

By Molly Knight

Space NK is not one to shy away from a challenge, it seems. The U.K.-based beauty retailer is expanding to the U.S., where the competition for cosmetics customers has never been fiercer.

Since Space NK (the name is based on the initials of its founder, Nicky Kinnaird) opened its first boutique in London’s Covent Garden, in 1993, it has lured such celebrities as Cate Blanchett, Keira Knightley and Kylie Minogue with its hard-to-find products.

With 52 stores in Britain, Space NK crossed the water to open its first U.S. store in June, on Greene Street in New York City’s SoHo neighborhood. At press time the company had plans to open a second New York City store, on the Upper West Side, by year-end.

“We held back opening in the U.S. until we were in the position to launch in a meaningful way, rather than just dip a toe in,” said Kinnaird in a press release.
The company says it plans to open four more boutiques in the New York–New Jersey–Connecticut region by the end of 2008, though it declines to specify locations, citing pending negotiations. The company also declines to disclose sales per square foot.

All of its U.K. stores are stand-alones, and the company says it will stick with that formula and not open any U.S. stores in shopping centers.

At the Greene Street boutique, Space NK worked with Universal Design, the firm responsible for the architecture of Stella McCartney stores, to create an airy, light-filled space. The unit is known for an eclectic mix of products from many countries and personalized customer service. It offers about 50 brands on the 2,000-square-foot selling floor. The company says several of these skin-care names are selling in the U.S. for the first time, including Eve Lom, Pro-Ferm and SheerinO’kho. Additional brands exclusive to Space NK will be rolled out seasonally.

In October the unit opened two treatment rooms for Eve Lom facials. The Space NK aestheticians receive training from Eve Lom in London before starting work, which could explain why the treatments are so pricey: A 90-minute facial costs $250, while 60-minute cleanses go for $175.

Spa treatments draw consumers to beauty retailers, making those retailers beautiful in the eyes of landlords, says Hannelore Leavy, founder and executive director of the Union City, N.J.–based Day Spa Association. “Obviously, a cosmetics store with spa services offers something unique, and landlords are always interested in diverse offerings,” said Leavy. “A place where a customer can get a facial with products they can buy at the store is a very good marketing strategy.”

But making a dent in this crowded industry can be difficult, some say. “This is a category where there are so many major players with lots of money, clout and stores,” said Jeff Green, president of Jeff Green Partners, a Mill Valley, Calif., retail consulting firm. “Walking into such a competitive area of retailing brings huge risk.”

Space NK used to be a novel concept, but specialty beauty retailers have flooded the U.S. market over the past decade, so it will be difficult to stand out here, says Wendy Liebmann, president of WSL Strategic Retail, a New York City–based consulting firm. “When Space NK first opened in Covent Garden, I loved the concept because it was so fresh,” said Liebmann. “There are just so many more competitors in this business than there were 20 years ago,” said Liebmann. “You’ve got big names like M.A.C. and Aveda picking up steam, and now that Limited is really pushing C.O. Bigelow and Bath & Body Works, it looks to get even more crowded.” Indeed, the proximity of the likes of Aveda, Origins and Sephora to the Space NK Greene Street boutique, causes Liebmann to dub the area “Beauty Row.”

Space NK may be able to resonate with consumers who have spent time in the U.K., but strong brand loyalty in perfume, cosmetics and hair products make it difficult for upstart companies in the beauty business to lure new customers, Green says. “We’re talking about products that affect a woman’s appearance, which is very personal,” said Green. “Once someone finds what works on their hair or their face, she’s pretty much going to stick with it unless something drastic happens. Catching a woman’s eye with a new product is very difficult.”

It helps to lure them into stores with old favorites, says Green, and Space NK does just that. In addition to its eponymous line, Space NK also offers lotions and potions from such familiar names as Acqua di Parma, Laura Mercier and Nars. “In a lot of ways Sephora came over from France and took the country by storm because its unique build-out and design made it more of a makeup emporium,” said Green. “For a place like Space NK to be a hit here, they’re going to have to offer products Americans are familiar with while they slowly build a name for themselves.”

At the same time, haste need not be part of the formula. Green points to Kiehl’s emergence as a household name to show how patience can pay off. “Kiehl’s sat with four stores for a very long time,” said Green. “Once they built up their reputation they expanded to 20 or 25 stores, but that’s still not that many. It really takes a long time to grow a cosmetic brand. You’ve got to first get your footing against the big boys like Sephora and Bath & Body Works before you really have a shot at expanding successfully.”

One U.S. competitor is Bluemercury, a Washington-based luxury apothecary and spa chain launched in 1999. After years of operating stores in Chicago, Maryland, New Jersey, New York and Pennsylvania, the company expanded to California, Florida and Massachusetts this year.

Sources say they expect to see a similar expansion strategy from Space NK. “They must be gearing up for something large, or else they wouldn’t have come over here, because having a couple of stores is just too expensive,” said Liebmann.

Still, offering facials may not be enough to distinguish Space NK from the others, because spa services in stores have become common over the past 10 years. A better way might be for Kinnaird, as the face of Space NK, to position herself as a trusted beauty source, says Liebmann. “For Space NK to be successful, she really needs to market herself and make people care about her point of view,” she said. “Otherwise it’s kind of the same thing as everywhere else."