space nk interview questions

UK-based retailer Space NK is known for its curated edit of beauty products. The company now has 72 stores in the UK and Ireland and recently implemented a wholesale model in the US through partnerships with Bloomingdale’s, Nordstrom and Walmart. It also has a thriving online business. In an interview during the Beauty in Travel Retail webinar organized by the TFWA in partnership with BW Confidential, Space NK CEO Andy Lightfoot provided insight into the future of online sales, how the role of the store is changing and the impact of inflation on the market. He also talked about the retailer’s new Wholesale Plus model in the US and upcoming trends in beauty.

During the pandemic you saw a surge in online sales, and e-commerce now accounts for around 50% of your business. Do you see online sales becoming much bigger? And if so, will you look to close brick-and-mortar stores?

It’s a great question and every retailer is probably debating what the balance between e-commerce and physical retail will look like. Undoubtedly, we’ll continue to see online sales grow, both in terms of the market, and for us as a retailer. We are seeing significant growth in international markets, so that alone will drive the share of e-commerce, and we also expect it to become a bigger share [of business] in the UK.

But stores remain an integral part of our business. If we go back 25 years, when we started opening doors, they were seen as just a single location without really thinking about how they contributed to the business in general. Now, however, it is far more complex. We have a minimum of three objectives for every store that we open. Each store needs to contribute to sales and profit, it needs to acquire customers, so it has to be a place where people can discover brands, and it needs to contribute to e-commerce and have a halo effect. So how we choose our locations and the types of stores that we introduce now is much more complex.

So the role of the store is quite different to what it was in the past given the rise of e-commerce?

Very much so. It’s shifted from being seen as two separate channels to one ecosystem, and to enabling customers to shop how they want to shop. We see customers coming into stores, discovering product and maybe ordering online, and then we see people looking at products online and coming to stores to complete that purchase; there is a real blurring of the lines.

One of the things that’s talked about a lot is a shift towards being purely experiential. So do we shift as an industry towards efficient fulfillment online, and then just create these physical experiential spaces? With beauty, there is still a desire to transact and make the effort to visit a store and be able to get the product. So it is important that we continue to invest as retailers in terms of what the customers want, and not try to define [the store] as a different space too fast because it’s convenient for us as retailers.

You have said that you want online to work seamlessly with stores. What are you focusing on to achieve this?

It is not easy, and you have to set out from the central point of how you’re trying to draw those two channels together. The first way that we do it is through data. We capture data on around 90% of all transactions, whether they are online or in stores. Everybody captures data online, but not many people successfully capture it in stores. We’ve worked very hard on that and have been successful in unifying that data. The greatest use for that is in personalization through our various communication channels – so being able to recognize when someone is going into a store and has bought a product and having that lead to personalization. We’ve done some experiments with feeding data back into stores, but we haven’t really found a good way of doing it. We introduced clienteling devices, iPads and various other devices to enhance our beauty advisors’ experience, but thus far, they have actually been more of a barrier to the interaction with the customer, who goes to our stores to have a personal interaction with a beauty advisor – what they don’t want is the BA reading off an iPad about the last three samples they received. So we have pulled back on that.

Some of [the other ways of doing that] are simple from a consumer point of view, but are quite complex to execute. One is our two-hour delivery service. As far as the consumer is concerned, they go to the website, order a product and have it delivered by courier in two hours. But that is fulfilled from stores, so we’ve had to build the capabilities to take that order out of normal warehouse routing and our normal order management system, and put it into stores, and for the stores to be able to pick that product and understand stock accuracy in real time. Those are some of the other ways that you can join these channels together. It is about making all of those little things smoother by using both online and stores and making them complementary.

You mentioned data. Based on data, some retailers have introduced their own version of Amazon Prime to improve CRM and also provide a new revenue stream. Would you look at an Amazon Prime type service?

Yes, we would consider that. I used to work at Amazon and was involved in the real enhancement of Prime going from what was a delivery subscription to this suite of services of TV and on-demand music, etc. One of the things that you have to think about when you put in place something like a Prime subscription, is how you enhance that experience. Asking people to pay £10 for unlimited next-day free delivery over a year is a good starting point. But my knowledge of what happened at Amazon was that you get your best customers signing up for that, so it’s actually a loss leader; what you’re doing is tying in loyalty over a period of time. There are other ways to do that. It doesn’t necessarily have to be delivery subscription, and where it gets interesting is where you enhance that service and you consider ways as a retailer that you can use the additional data that you’re getting from your customers to do something that’s exciting and that surprises and delights. That is what we are thinking about what we might do in that subscription space.

It is a little bit too early to say. But it’s really around the personalization of being able to put in front of customers the suggestions and products that we think they will love and doing it in a way that makes their shopping experience even easier. Certain retailers do sample boxes, and in my experience, the vast majority of them do the same sample box for everybody, or a box with just two or three variants. They are not personalized and certainly not based on browsing and buying behavior over the past six or 12 months. Being able to do that is very interesting and very differentiating.

Would you consider teaming up with an online player to boost your reach in certain markets?

There is a unique challenge in teaming up with online players. We didn’t really develop the partnership, but we were actually one of the original beauty partners of Farfetch. What we found while we were working with them was the consumer didn’t know they were buying from Space NK. As far as the consumer was concerned, they were buying for example La Mer from Farfetch. And so there’s a unique challenge when working with an online partner of getting a share of voice for you as a retailer of brands, because it is [that model] where you’ve got one retailer servicing the customer, another retailer in the middle, and a brand, and the retailer in the middle tends to get cut out. There’s no motivation for us to establish a competitor by supplying them with all of our amazing brands that we’ve spent 30 years curating, and allowing it to list them overnight; there’s got to be this symbiotic nature of Space NK getting significant visibility in the relationship.

There is fierce competition in the UK beauty market at present, with Sephora’s acquisition of online retailer Feelunique, THG’s purchase of Cult Beauty and more players getting deeper into beauty such as Asos for example. How can you better stand out and operate amid this increased competition?

The UK beauty market is incredibly attractive. In terms of addressable population, it is relatively small, but in terms of spend, it’s significant, and there is a lot of innovation. We welcome strong competition. We have seen consolidation – we have seen the acquisition of Cult Beauty, LVMH’s [acquisition of] Feelunique and some pure players with department stores. We have seen Debenhams disappearing and the House of Fraser, looking for a reset and working out what it is going to do next, and also other competitors emerging. The key is to make sure that you are clear on what you offer the consumer. Our vision is offer is to offer the most in-demand beauty brands and icons of the future. We are about finding the big brands of today and the big bands of the future and curating those together with authority and with expertise, and we try to offer that expertise both online and in stores. We realized that the way of doing that is very different. What works in terms of interactions in a store might not work online and vice versa.

We think about our customers very loosely in buckets. It’s a big oversimplification, but it illustrates our mindset of fast and slow customers. The fast customer is someone who wants to buy the same product they always do, and for them a luxury experience is to get into a shop fast and buy as quickly as possible. A slow customer is someone who wants to go in, spend time, wants advice, wants to be guided and explore other products or brands, and what’s new and trending. And so very quickly understanding those mindsets and adjusting our behavior and our environment to them is important.

You decided to close your stores in the US and focus on a wholesale model, which you call Wholesale Plus, with Space NK offers in department stores Nordstrom and Bloomingdale’s. At a time when many companies are going direct given the advantages of access to data etc, why implement a wholesale model as opposed to operating only online?

First of all, we do serve the US through our e-commerce site – it is our single biggest international market, and we still have a significant e-commerce business there that is growing, and we continue to invest in that. But we saw an opportunity to create a new market and to do something that nobody else was doing. We had experience from our concessions in Bloomingdale’s and Nordstrom. What we saw was, because of our ability to curate a number of brands – between 20 and 50, depending on the size of the store and the staff that we could put in that space, we were almost in the top three in every store location that we were in, and if not number one. With that, the ability to then divide those fixed costs (the fixed costs of staffing, marketing, of stock to hold make it very difficult for the mono brands to win in that space) between 20 to 50 brands made it very efficient for the brands and for the retailer. So almost by accident, we found this opportunity, and were uniquely placed to take advantage of it. So when the pandemic hit, and it really hit our US business hard, we made the decision to focus on that. The speed of our growth shows how well it has worked – we’ve got over 150 points of distribution (excluding our recent Walmart partnership) in Nordstrom, Bloomingdale’s and Hudson’s Bay in Canada. These are premium beauty locations, and the ranges and product are very similar to what you see in our UK boutiques.

You recently announced a partnership with Walmart to create Space NK units in their stores. Some would argue that there is a disconnect between Walmart’s mass positioning and the brands you offer. How do you see this?

I’ll answer that in two ways. The first is that Walmart has every customer in the US. Whatever your individual opinion is on Walmart’s brand positioning, the reality is that every demographic and every level of earnings visits a Walmart, and most of them do so every week. So the sheer volume of customers and the quality of those customers cannot be questioned. Then the question is about their brand positioning, and it’s a relevant point. But if you visit a Walmart, yes, you will see a warehouse that sells everything at every price point. But within that Walmart you’ll also find the latest iPhone from Apple, high-end baby products and high-end apparel. And what Walmart has been doing very well over the last few years is repositioning themselves, not by adding things that don’t matter to consumers, but by investing. I think that they represent real innovation in the space. At a time when it felt like Amazon was going to crush all those in its path, Walmart probably built the most successful barricade, and found a way to compete both directly and by doing their own thing very successfully. They have an incredible technology hub, they’re very innovative and they have huge aspirations to move their brand forward. Some of their new stores are very impressive and show that they have really thought about the customer journey, and how people shop and interact.

For us also, the brands that you will find in a Walmart are not the same brands that you will find in Nordstrom or in our UK stores, but they are the best brands in that environment. We have experimented with a range of product areas. Interestingly, some of the high-end products are working really well. The most expensive product we have in there is Dr. Lancer, which are $60 to $100 products, and they are selling really well both in terms of units and value. That reflects that every type of customer goes there. Also, for much of the US it can be to 40-minute drive to a local shop, so the convenience and the competitive advantage of being where that customer is going anyway for their weekly shop is significant.

Would you consider implementing your Wholesale Plus model in other markets. Could this be an option for the travel-retail channel?

Yes, I think it potentially would. Travel retail already does such a good job, so it is not an area that is obvious for disruption with these types of models, because they’re already incredibly well staffed. If I go back to what’s made the Wholesale Plus model successful, it is generally where staffing is expensive or difficult because the densities aren’t there and the customer footfall levels aren’t there. Travel retail doesn’t suffer from that – it’s got high footfall, it’s generally very well staffed and in my experience staff is pretty knowledgeable. But all of that said, travel retail is an interesting space. Conceptually, this idea of being able to bring 20-plus brands together and sell those as a curation or position them as curation could do really well. Brands would benefit versus them being on individual shelves. We’ve had in all of our partnerships, brands move across to us, because the sales increase they get with us more than offsets the need for them to divide the margin an extra way. We can drive so much more volume of their products versus their products just sitting on a shelf.

How has your assortment changed since the pandemic in terms of category share, new categories, price points, and how do you see inflation impacting consumer spend in beauty?

We have seen a significant make-up resurgence and a switch from home to personal fragrance – the candle and diffuser market was massive during the pandemic, and that has resettled back with personal fragrance taking up that space. One of the interesting trends during the pandemic was the shift away from newness; consumers were going to tried-and-tested products and brands that they know, but we have now seen a big shift back. There is a massive appetite for newness, and I’m particularly talking about new brands here rather than just new product development within existing brands.

In terms of inflation, we’re starting to see the early signs of it. We’re not seeing the unit sales go down, but we’re seeing people start to shift into slightly lower price points. But it’s very early, and I would say the trends are not established; however, it’s something that we’re watching closely.

Interviews for Top Jobs at Space NK

Marketing Manager Interview

Field Visual Merchandiser Interview

Beauty Advisor Interview

16 questions about working at Space NK

What is the dress code at Space NK?

Back or dark clothing

What would you suggest Space NK management do to prevent others from leaving?

Stop using there assistant managers to carry them !

What is the interview process like at Space NK?

Phone call / face to face interview/ pretty straightforward and uncomplicated

How do you feel about going to work at Space NK each day?

I hated it. It felt like I was forcing myself to get up. I ended up calling in sick most days because I wasn’t mentally ready

How has Space NK responded to the COVID-19 outbreak?

Pretty good if you’ve been with them long enough – furlough and very supportive

If you were in charge, what would you do to make Space NK a better place to work?

Pay a decent wage … on experience and age

What benefits does Space NK offer?

Amazing training

Does Space NK allow for flexible working hours? Or are the hours set?

no, the hours are set.

What was the most challenging part of your role at Space NK?

Expected to do everything and no support from management

What is the training like from Brand reps? Is it very technical and do you need a good base knowledge of the skin /anatomy ?

Reps are amazing ! They are well trained and give great knowledge , also help with store sales !

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Your Career at Space NK

Space NK offers a beauty insider’s expert opinion on an edited selection of the finest specialist skincare, makeup, haircare and, fragrance from around the world.

Over the last decade, Space NK has acquired a devoted following of loyal customers. Our name is synonymous with impeccable customer service delivered by Beauty Advisors who know that all our products are selected for their quality and performance. We aim to deliver the highest possible level of customer care across all aspects of our business. A strong passion for the beauty and wellness market is key to ensure all our applicants maintain and build on our high level of customer care.

Previous retail experience in skincare or cosmetics is ideal, but not essential, as ongoing training and development are important aspects of the Space NK HR philosophy.

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