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Aesop, the trendy Australian skincare brand loved for its parsley seed facial cleanser and geranium leaf body wash, is opening a larger format store on London’s Regent Street, a central tourist thoroughfare where it will sit adjacent to Michael Kors and Lululemon.
It’s a notable shift for the brand once famed for its store locations, a marker of cool for trending districts from Broadway Market to Borough in London. Today, the brand has London locations in Westfield shopping centre in Shepherd’s Bush, and in Coal Drops Yard, the recent development adjacent to Google’s headquarters in busy King's Cross. In May, it opened a Paris store in popular tourist hub Rue Vieille du Temple in the Marais, and it is planning a store on Shanghai’s Dongping Road.
The move to more commercial and, in some cases, larger-scale locations is a pivot for Aesop, which built its success on delivering personalised experiences in neighbourhood stores that attract millennials to fill their bathrooms with upmarket products, carefully placed in the coolest hotels and restaurants to reinforce its status. With the new store openings, Aesop says its ambition is to reach a broader group of people. But, can it manage its growth while keeping its cult status?
The brand is owned by Brazil beauty conglomerate Natura & Co, which also owns Avon and The Body Shop, and posted net revenues of about $7.6 billion in 2021. The group does not specify revenue by brand but said Aesop’s revenue increased 33.4 per cent in the full year and EBITDA margin was 24 per cent for the full year, driven by new categories and geographical expansion. Aesop occupies a unique spot in Natura’s portfolio as “an exclusive, niche and luxury oriented brand” with “a very unique set of fragrance IP”, but is a smaller player with revenues less than $500 million, estimates Stephanie Wissink, managing director of consumer research at investment banking firm Jefferies.
The new formats in London, Paris and China offer “a bigger stage and a broader audience to appeal to”, says Karl Wederell, Aesop’s general manager, who is overseeing its expansion and retail strategy across its 12 markets in Europe, the Middle East and Africa (EMEA). Aesop had been ���overtrading” in local areas for some time. “The volume of traffic we were getting and the demand for our product was such that we could move quite naturally into more commercial locations. The days of customers wanting us only in the neighbourhoods have passed and we actually now need to be more present.” Aesop is conscious of “managing perception” as it opens up in more mainstream spaces, he says. “We don’t use a cookie cutter mould for our stores, and always try to do something unique and special for the area that we’re in."
It’s also about luring shoppers back to stores since Covid restrictions were lifted. Pre-pandemic, nearly three quarters of revenues came from direct in-store sales. But, two years of pandemic-induced closures (affecting 90 per cent of 300-plus global stores and 80 retail doors) e-commerce sales became the majority at 64 per cent of the total, according to the brand. In-store experiences are the key to go beyond what you can quickly click to buy online. The new London store – its 24th standalone in the UK – marks “a real moment of maturity”, says Wederell .
At 410 square metres, including treatment rooms, Regent Street is by far the brand’s largest store in Europe, eclipsing the 80 square metres of its typical stores. Aesop built its appeal through if-you-know-you-know (IYKYK) marketing, which creates communities who feel like they're in on a secret — a playbook since copied by many other brands. Each neutrally decorated retail space features a sink and testers. Now the “statement store” on Regent Street will also include four treatment rooms where customers can select from six facial treatments, and a fragrance consultation room. Treatment rooms and personalised consultations will play a key role in “elevating” the customer experience – core to the brand’s strategy, says Wederell.
Aesop first introduced facial appointments in 2005 although there are only a small handful of one-room treatment concepts, often adjacent to Aesop stores, in Asia and Australia, and many customers remain unaware of this offering, he says. The ambition is for Aesop to become as known for facial services as it is for quality skincare. It wants customers to approach treatments as a “regular part of the maintenance of skin health”.
The new openings “carry some risks”, says Neil Saunders, managing director of retail at analytics company Globaldata, because “you don’t want to become ubiquitous” and brands can be devalued in the eyes of consumers if they over-expand, he warns. “Having said that, Aesop does have a good rationale for opening more stores in high traffic locations because a lot of consumers still haven’t heard of it. Their past stores have been very local and can be buried away or not obvious. Opening in more mainstream locations will expose them to more consumers. As long as they can keep their brand essence, it’s not too problematic.”
Fragrance is also a growing category, accounting for 10 per cent of revenues, double the amount just two years ago, according to the brand. The new London store will have a private fragrance consultation room. Aesop will also launch a new fragrance later this year, and plans to introduce several more in the subsequent years. Premium brands can benefit from this kind of category extension as “consumers are looking for emotional wellness in both their beauty routines and home spaces,” says Kayla Villena, industry manager of beauty and personal care at research firm Euromonitor International.
Aesop’s gender-neutral positioning and vegan and cruelty-free claims also help to broaden its audience, she adds. “All these features resonate with their target consumers and help elevate the brand to be more premium and more of a lifestyle brand.”
Staying true to its origins will be core for Aesop’s success. “The test for us will be how we keep that authenticity of who we are,” admits Wederell. He has his eye on “underpenetrated” markets such as Germany and new regions including Ireland, Portugal, Greece and the Middle East, the latter where the brand only has a licensed partner. He hopes Aesop can maintain relevance by offering an experience that isn’t simply transactional, but more prescriptive and sensorial. “Customer engagement remains central to who we are and it must always stay that way if we’re going to continue to be successful,” he says. “We don’t ever want to compromise that.”
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