What Is a Concession in Retail?
A concession is a branded space within another retailer's store. Learn how concession models work and when they make sense for a growing brand.
Key Takeaways
- A concession allows a brand to trade from within a host retailer's store under the host's footfall umbrella
- Concession fees are typically a percentage of sales (10-20%) rather than a fixed rent
- Concessions give brands a physical presence without the full cost and commitment of a standalone lease
- The brand typically manages their own staff, visual merchandising, and inventory in a concession
What a concession is
A concession is a branded retail space operated by one brand within the store of another (the host retailer). The brand takes over a defined area — a corner, a fixture, or a dedicated room — and trades from it under the brand's own identity while benefiting from the host retailer's footfall, location, and customer base. Department stores (John Lewis, House of Fraser, Selfridges) have historically operated largely on a concession model, with dozens of brands each running their own branded spaces within the department store shell.
How the commercial model works
Concession agreements typically charge the brand a percentage of net sales (gross sales minus VAT and returns) rather than a fixed rent. The percentage varies by host retailer, location quality, and category — typically 10-20% of net sales for fashion and beauty, potentially higher for food. The brand usually provides and manages its own staff (though some agreements use the host retailer's staff), manages its own inventory, and controls its own visual merchandising within agreed guidelines. The host retailer provides the space, utilities, and the retail infrastructure.
Advantages of the concession model
For a growing brand, concessions offer: immediate access to the host retailer's customer base and footfall without the cost and risk of finding and fitting out a standalone store, a lower capital requirement (no large fit-out cost as the space is provided), a variable cost structure (costs increase with sales), a testing ground for new markets or locations before committing to a standalone lease, and the credibility of being associated with a well-regarded host retailer. Selfridges or John Lewis on your stockist list carries significant brand credibility.
Disadvantages and risks
Concessions also have significant limitations. Dependency on the host retailer's footfall — if the department store's footfall declines, your sales decline regardless of your brand's strength. Limited control over the surrounding retail environment — your concession is adjacent to brands you did not choose. Host retailer financial risk — if the host retailer goes into administration (as several major UK department stores have), your inventory and deposits may be at risk. Percentage-of-sales model means your cost is higher when trading is strong — which feels counterintuitive.
Concession vs wholesale vs own store
A concession sits between wholesale and a fully owned standalone store on the control-cost spectrum. Wholesale: lowest cost, lowest control, brand invisible in-store. Concession: moderate cost (variable with sales), moderate control (brand manages the space), brand visible and differentiated. Own store: highest cost (fixed rent regardless of sales), highest control (total environment control), maximum brand expression. The right model depends on the brand's stage, capital available, and the importance of in-store brand experience to the customer proposition.