Nicky Kinnaird, the queen of British niche retailing, is betting that the trademark specialty apothecary approach of her Space NK beauty boutiques will play well in the much larger, more bruising U.S. arena.
Kinnaird plans on opening the first of five Space NK beauty stores at 99 Greene Street in April in New York’s SoHo neighborhood. The first unit, containing a total of 3,000 square feet, will serve as the company’s U.S. flagship. Slightly less than 2,000 square feet of the floor area will be dedicated to selling, with the remainder earmarked for offices and administration. The American operation is being spearheaded by Shelly Kohan, vice president of U.S. development, and Kinnaird is expected to make monthly visits. The store will include treatment rooms to give facials under the Eve Lom banner, Space NK’s spa brand. The facilities also will be available for use by other treatment vendors. Space NK also will launch an e-commerce Web site in the same period.
Kinnaird said earlier this week that the other four stores will be in the tristate area, including a second New York store, as part of her cluster strategy that hinges on locating stores in neighborhoods of affluent areas. “Our policy is in finding the right stores” with the neighborhood to match, she noted. For the second New York store, she is looking at the Upper East Side, the Upper West Side and the East Village.
Judging from her track record in the U.K., Kinnaird has ambitions to one day go coastal. She opened her first store in London in 1993 as a 250-square-foot fashion boutique, including apparel, accessories and a small apothecary. The 250-square-foot beginning gradually grew to 1,000, completely devoted to beauty, but it took two-and-a-half years to exhaust the obvious possibilities in London with 16 to 17 stores before the chain spread to the rest of the country. Space NK now has 46 units. While the company does not break out sales figures, industry sources estimate that the chain does more than $75 million annually in sales. With an average store measuring about 1,000 square feet, the sales productivity computes to more than $1,500 a square foot.
Kinnaird declined to estimate the size of the U.S. investment, implying that the first five stores would be bankrolled through existing cash flow. Manzanita Capital has been a partner since 2003.
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The Space NK approach involves providing an intimate boutique ambiance with a highly specialized, tightly edited assortment aimed at problem solving. The key is customer service. Kinnaird stresses that all the sales staff is trained with six weeks of schooling across all the brands. In the U.K., a typical store will have five to 18 sales people on the selling floor at any time, Kinnaird noted. The Greene Street store not only will have treatment areas, but there will be a room downstairs where lecturers and makeup artists can give talks on trends and seasonal looks. In terms of diversification, Space NK is in the process of opening a new flagship with a spa in the Knightsbridge section of London at 40 Hans Crescent. The first spa location was opened in Notting Hill in 1999. Space NK also opened a men’s store in London’s Soho last year.
When asked how Space NK could differentiate itself from Sephora in the U.S. market, Kinnaird pointed out that her stores are much smaller, with some units measuring only 500 square feet, and therefore more intimate. The size of an average Sephora has been quoted at 4,500 square feet.
Small spaces also dictate a finely crafted editing job. Part of the success in the U.K. stemmed from merchandising niche American brands, so Kinnaird intends to present the U.S. with some exclusive European names, such as Hinles & Baumes, a morning face cream; Sheerin Okho, described as a combination of cosmetological performance and natural ingredients along the lines of skin care by Dr. Sebagh and Dr. Hauschka, and Pro-Ferm, an antiaging cream, based on research in the Bio-Technology Institute of the Berlin Technical University, that is designed to work with the body’s immune system to repair cellular damage.
Kinnaird said the average Space NK store carries 50 to 60 brands, with more than 40 percent of sales generated by skin care (including Eve Lom), 30 percent by color cosmetics, 10 percent by hair and fragrance and the remaining 20 percent by the Space NK house brand.
Kinnaird noted that, while a Sephora store may have 28 color brands, Space NK will have five or six. “The customers appreciate the cherry-picking we do for them,” she observed.
The initial reaction seems welcoming. William Lauder, chief executive officer of the Estée Lauder Cos., pointed out it will be more challenging to open enough stores to make a footprint in the U.S. than it was in the U.K. But, he added, “they are a very imaginative retailer and I think there is always room in the marketplace for imaginative retailers.”
Sylvie Chantecaille praised Kinnaird for her foresight in providing a personal, service-oriented alternative to a very traditional British market model. “I think they will be competitive with Barneys,” she said, in terms of a launching pad for new luxurious brands in a relaxed selling environment. Asked if there is a need for another beauty retailer, Chantecaille replied: “If anyone does something well, they become needed. And they have done things well in Europe.”