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The boss of Liberty, one of Britain’s oldest department stores, is expanding its own-brand offering and betting that beauty sales will fuel growth, in a move that could lead to new stand-alone shops.
Chief executive Adil Mehboob-Khan is hoping that the luxury retailer, known for its iconic building on Great Marlborough Street, can harness the popularity of its Liberty products to expand the business.
Last year Liberty launched LBTY, a beauty brand selling five high-end perfumes inspired by its well-known prints. It plans to create a full beauty offering alongside its existing own-brand accessories, womenswear, jewellery, homeware and menswear.
Mehboob-Khan told the Financial Times that Liberty’s own products were among its best-performing, with its new perfumes “doing phenomenally — we’re struggling to keep up with demand”. He added there was “a lot of pull for that to go international”.
Liberty’s growing focus on its own-label products comes as department stores increasingly seek to capitalise on their own goods, which have more generous margins and can create a competitive advantage.
Between 2019 and 2022, sales from department stores’ private labels increased from 9 per cent to 16 per cent of turnover, according to the International Association of Department Stores.
Mehboob-Khan said there was “a lot of demand for [Liberty’s brand] to go outside beyond our ecommerce”, which could lead to the first new stores since last century. Such locations would sell only Liberty-branded products.
“I do imagine, under the Liberty Brand umbrella, we will have locations . . . If it continues like this, there will be demand and justification for us to have our own stores of our own brand.
“But I don’t see us try to replicate [the] Liberty [store],” Mehboob-Khan added, referring to the famous building constructed in 1924 using the timbers of two ancient three-decker battleships. “It’s very difficult to get the magic of the place to travel.”
The Liberty group spans three divisions: its retail business, including the flagship store in London; its fabrics arm, known for its floral textiles; and the Liberty Brand, focused on the “development of a luxury goods brand [spanning] multiple categories that will be distributed on a global scale”, according to its most recent filings at Companies House.
Liberty is betting on beauty sales to fuel growth across the business, in a tricky market for luxury fashion, which has been hit by a slowdown in demand. “We will definitely be pushing beauty,” Mehboob-Khan said of his priorities this year. “The jury is out on what the fashion market will do, but we expect beauty and accessories to do well.”
The high-end beauty segment has grown faster than the rest of the market since 2014, according to new analysis from AllianceBernstein.
“Beauty is perfectly well-placed for a world of higher-inflation-for-longer,” the analysts said. “Whilst slightly more cyclical, it has shown to have the best pricing power as consumers are increasing their share of wallet on beauty spending.”
The global beauty and grooming market was valued at $332.5bn in 2020 and the market is expected to grow with a compound annual growth rate of more than 4 per cent during the period 2021 to 2025.
Leonard Lauder, the billionaire heir to the Estée Lauder cosmetics empire, coined the so-called lipstick index, whereby sales of affordable luxuries rise in economic downturns.
The Liberty group posted a 23 per cent increase in revenues to £185mn for the year ending January 28 2023, and made a pre-tax profit of £712,000 compared with a loss of £7.1mn the year before as it recovered from the pandemic.
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