August 26, 2024
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When Does Store-Within-a-Store Provide Equal Benefits?
In a column for Toronto’s The Globe and Mail, Joanne McNeish, a marketing professor at Toronto Metropolitan University, said the store-within-a-store concept is a win-win for both partners as long as the two brands are complementary.
“In most cases, the host retailer is at greater risk of damaging its brand image so picking a partner brand with an equivalent quality brand image should be carefully managed,” said McNeish. “With multiple brands within the retail space, foot traffic is increased. Customers come in to look for a specific product and may discover the partner retail brand in the same space.”
Analysis from eMarketer in late 2022 found that store-within-a-store concepts work well when the two brands have complementary offerings and their customer bases align. eMarketer wrote, “For example, Target and Apple are a good fit, given the former’s cheap-chic aesthetic and Apple’s high-end brand positioning. That enables both brands to benefit from each other’s traffic. Apple gets a high-profile location where consumers are already regularly shopping, while Target sees traffic from customers who are seeking Apple-trained Target tech consultants or a broad selection of Apple products.”
eMarketer also noted that in many cases, the in-store shop helps the host retailer gain credibility in a new category, such as Macy’s partnership to open Toys“R”Us in-store shops.
One risk, according to eMarketer, is that while third-party in-store shops may increase foot traffic for the host retailer, “that incremental gain is only valuable if it leads shoppers to explore the rest of the host retailer’s store.”
Successful collaborations also depend on the financial structure of the deals, with many operating under leased models with a profit-sharing component. As noted by research from Texas State University professors, the arrangement often involves the brand or retailer opening an in-store shop “partly or wholly managing activities such as pricing, merchandising, staffing, and stocking in an autonomous manner.”
Maven Commercial retail leasing partner Ali McEvoy believes brands generally provide a better experience for consumers in their stand-alone stores.
“For example, an Apple in a Target will never be an Apple Store,” she recently told Trademark. “In-store mini-shops also run the risk of lowering the image of their brand by partnering with the wrong retailers. Starbucks in Safeway elevates a Safeway location but [does] little to nothing brand-wise for Starbucks. However, the sales and exposure clearly outweigh that concern, given their decades-old partnership.”
McEvoy also offered Sephora’s in-store partnership with JCPenney, which ended as the latter was undergoing bankruptcy proceedings, as an example of a “pairing that was too mismatched with clearly not enough capital returns to justify a continued partnership.”
The trend continues to favor the opening of more in-store shops from brands or third-party retailers inside stores. Some interesting recent pairings include Conn’s, the home goods retailer, opening in-store shops inside Belk, Petco shops opening at Lowe’s, smart-home gym maker Tonal opening shops in Nordstrom activewear departments, Carhartt shops opening inside Tractor Supply, and Babies“R”Us shops opening inside Kohl’s.
BrainTrust
Liza Amlani
Principal and Founder, Retail Strategy Group
Perry Kramer
Managing Partner, Retail Consulting Partners
Dave Wendland
Vice President, Strategic RelationsHamacher Resource Group
Recent Discussions
Discussion Questions
Do you see more pros than cons in adding in-store shops for host stores?
Do host retailers or brands/retailers occupying the space generally benefit more from store-within-a-store arrangements?
Poll
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Good shop-in-shop concepts add value and offer something that the host retailer doesn’t provide. Sephora in Kohl’s is a great example of this because, before it came along, Kohl’s own beauty offer was incredibly weak. However, the lesson from this is also that a good shop-in-shop cannot save a bad host. This applies to Kohl’s as it did to JCPenney, which also had Sephora, before it. Shop-in-shops work best when it’s a partnership of equals. Like Target and Ulta, which have complemented each other’s strengths.
Exactly right, Neil. In the case of Sephora, neither JCP nor Kohl’s has benefitted from the extra traffic that the expanded cosmetics department should draw to other women’s areas. And both stores made considerable capital investments to build Sephora shops, while reducing their footprint in other categories. The host store needs a lot of other compelling content for the partnership to work, and the shop-in-shop needs to fill a void.
Completely agree. Kohl’s keep telling us that people who shop at Sephora put Kohl’s items in their basket. What they don’t say is that most of these are Kohl’s shoppers who are buying Sephora products, not vice versa!
The pros out weigh the cons when the partnership is a strategic decision vs. an act of desperation to add traffic without long-term benefit. When done strategically the store within a store concept can extend and improve customer loyalty and revenue. The example of Macy’s and Finish Line is a great example. It gives Macy’s access to an extended set of quality Footwear and drives foot traffic into a store where they are very likely to extend their shopping trip. It allows Macy’s to offset rent and allows Finish Line to extend their top-line and bottom-line. Both brands have done a good job of allowing the other to protect their brand identity with no degradation of service or loyalty.
Shop-in-shop concepts can be a win win if the brand keeps their distinctive identity across the shop fit, merchandising and product mix within the retailer. This can only happen if brand merchants and ambassadors are embedded in the process. From buying to sales associates to visual merchandisers must be integral to the shop-in-shops success. I say this with the experience of working with Ralph Lauren and our Lauren shops at retailers across UK, Ireland and Europe. The success of our shop-in-shops were grounded in keeping our distinctive Ralph Lauren identity from building out the shop to the uniforms worn by the sales associates. We shared insights with the retailer and collaborated on buying decisions and marketing. It was a true partnership.
It is clear that the store within a store concept, as well as two or three stores within a store, are an integral part of retail’s future.
For instance, Target’s partnership with Ulta Beauty has proven highly successful, offering customers a dedicated beauty section within Target stores. This collaboration has increased foot traffic and provided a unique shopping experience.
When two or more stores within a single store deliver incremental foot traffic to the host store, without duplicating services or products, the outcome is generally positive for all parties involved, including both retailers, each brand, and the consumer at large. There are more advantages than risks.
Another notable example is the collaboration between Starbucks and Barnes & Noble, where customers can enjoy a coffee while browsing for books. This partnership has created a welcoming and productive environment for shoppers, blending the experience of a café and a bookstore under one roof.
However, there are risks, mostly for the host retailer. Customers sometimes fail to distinguish between the store within a store and the host, and the performance of the “store within” can severely impact the host store’s image, customer loyalty, and even profitability.
When the brands are not well-aligned, the host retailer may suffer from a confused brand identity, which can dilute the overall customer experience. This misalignment can lead to customers feeling disconnected or unsure about the store’s core offerings, potentially driving them away. Furthermore, if the “store within” underperforms or fails to meet customer expectations, it can reflect poorly on the host retailer, harming its reputation and profitability.
Also, there is the possibility of crossover inventory, as was the case with CVS and Target. There were times when customers were confused about whether certain items purchased from HBC were from Target or CVS when in the drug and HBC section of the store.
One potential solution is to implement clear and distinct signage that differentiates the host retailer from the “store within.” Additionally, training staff to guide customers and provide information about the separate entities can help alleviate confusion. Another approach is to use distinct branding and layout strategies, ensuring that each section maintains its unique identity while still complementing the overall store experience.
It is also important that there is a very well laid out plan for where consumers check out, how returns are handled, especially mixed returns, and by whom, and where.
Ensuring a seamless customer experience is crucial in maintaining customer satisfaction and loyalty. When the process of shopping, returning, and navigating the different sections of the store is smooth and intuitive, customers are more likely to have a positive perception of both brands involved. A well-coordinated and clear strategy can enhance the overall shopping experience, encouraging repeat visits and fostering a stronger connection with the customer.
Overall, the concept of a store within a store provides brick and mortar with one certain advantage over e-commerce.
This advantage lies in the tangible, in-person shopping experience that e-commerce cannot replicate. Customers can physically touch, try, and compare products, which can lead to higher satisfaction and fewer returns. Additionally, the immediate gratification of taking a product home right away is something online shopping cannot offer. Db
Store within Store is interesting in that the primary difference is that the Brand owner can somehow afford to most closely look after the product mix store by store, staff each store with experts and still make money. A Retailer could in theory get the same signage, watch and manage the product mix more carefully, and hire and train its associates just as well – but of course won’t do any of those things. There are a very few cases where having a store in store gets the Retailers access to product it can’t normally order (like Finish Line in Macy’s gets more Nike products into a Macy’s store than Nike would offer directly to Macy’s….) But for the most part you have to ask the question if Apple can staff and stock a Best Buy store with the best product and best expertise, why can’t Best Buy do that themselves? Never happen…
Ah! the ole’ “mop and pail”…now when were they last here on RW?? Back on topic: to me, store-within-store’s are usually a sign of two possible things: a very strong brand…or a weak brand; in the case of a Starbucks in a Safeway – heck let’s give a nod to the frozen North and say ‘Loblaws’ instead – it’s the former; but macy*s and TRU, it’s the latter (techically more like two weak brands but…) There are a lot of both in this world, so I expect we’ll see more of these marriages of convenience.
Starbucks inside grocery stores are a good example of the store within a store. My grocery store has one, and also a sushi store. We’re going to see a lot more of this because it makes sense.
Yes, like Starbucks in Target. In our local Target it is almost always busy!
Leveraging each other’s strengths serves both brands well. Both win if appropriately structured.
Store-within-store arrangements can be mutually beneficial and impactful for both the brands and the retailers who host them. However, retailers need to be very careful about which complementary brands they choose to do an store-within-store concept with and be mindful of how the relationship might evolve over a long term. Retailers should also be realistic about the traffic stimulation benefit a brand in an in-store concept can draw – it’s not always as much as, or as impactful as the retailer expects (or hopes). More traffic does the retailer little good unless it can be converted into additional sales, and that can be very challenging to accomplish. That all said, I think that there are still more pros than cons for the retailer and that’s why these arrangements will continue to be a fixture in the retailing landscape.
Store within a store concepts work when it makes sense. Ulta works in Target because both stores have a similar cool vibe. What didn’t make sense was Sephora inside J.C. Penney. Did Sephora customers shop at Penney’s pre-Sephora? I doubt it. Along the same line of thinking, the brightly lit and well-merchandised Sephoras inside Kohl’s stores look out of place amid all the clutter on the host sales floor.
I think Craig described it best: “A marriage of convenience.” Until it’s not.
When the right pairing emerges, there are definitely more pros than cons. To be successful, both brands must find value in the relationship — and it MUST be logical to shoppers. At a minimum, a successful store-within-a-store concept must have these three essential ingredients: 1) common target audience; 2) brand strength and reputation; and 3) shared strategy.
The “right” partnership can significantly benefit the retailer and their vendor partners. Ensuring that there is great synergy between the brands is critical. Having complimentary customer profiles certainly helps. It’s also critical that the partnership includes the right metrics to measure its success. Those metrics need to include more than just sales; they need to include traffic, changes in category performance, and local market share and space productivity reporting. As Kohl’s has learned, dedicated space or in-store reps that do not raise the performance of the departments around them are more of a drag on performance than a benefit.
Shop in shops have been around since the dawn of the department store where each specialty counter was staffed by a category “expert.” Newer concepts are actually separate companies/brands hosting the space and are good fits for today’s shrinking sq footage brick and mortar channels. Unless a retailer is replacing a solid private label business with a less profitable shop model, I like the synergy. Stores save on operating overhead and training–think cosmetic counters in major dept stores, and brands have the ability to own their presentation and customer information. I can see this trend expanding in the fitness/athletic space and areas where product expertise add value.
The store-within-a-store concept is a great way for retailers to attract new customers and offer complementary products. However, it’s important to think beyond just matching brands and consider the long-term benefits for both partners. While increased foot traffic is certainly a plus, the real value lies in creating a seamless experience that builds customer loyalty and encourages repeat visits.
This is yet another signal that many larger format chains (I am talking about you Department stores!) are in trouble and need to continue to be creative in order to drive foot traffic. In other formats this idea potentially drives traffic however that traffic is not going to come without promotion.
I suspect the idea is not rooted in revenue gained or customer experience enhancements, but in the offset of cost from the host store to the pop up store, and at that basic level it is a winner. From a consumer standpoint it is hit or miss.
This is a great avenue for emerging/hot pure-play ecommerce product brands to grow. This is a great way for retailers to increase traffic. If the fit aligns it’s a win/win.
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Good shop-in-shop concepts add value and offer something that the host retailer doesn’t provide. Sephora in Kohl’s is a great example of this because, before it came along, Kohl’s own beauty offer was incredibly weak. However, the lesson from this is also that a good shop-in-shop cannot save a bad host. This applies to Kohl’s as it did to JCPenney, which also had Sephora, before it. Shop-in-shops work best when it’s a partnership of equals. Like Target and Ulta, which have complemented each other’s strengths.
Exactly right, Neil. In the case of Sephora, neither JCP nor Kohl’s has benefitted from the extra traffic that the expanded cosmetics department should draw to other women’s areas. And both stores made considerable capital investments to build Sephora shops, while reducing their footprint in other categories. The host store needs a lot of other compelling content for the partnership to work, and the shop-in-shop needs to fill a void.
Completely agree. Kohl’s keep telling us that people who shop at Sephora put Kohl’s items in their basket. What they don’t say is that most of these are Kohl’s shoppers who are buying Sephora products, not vice versa!
The pros out weigh the cons when the partnership is a strategic decision vs. an act of desperation to add traffic without long-term benefit. When done strategically the store within a store concept can extend and improve customer loyalty and revenue. The example of Macy’s and Finish Line is a great example. It gives Macy’s access to an extended set of quality Footwear and drives foot traffic into a store where they are very likely to extend their shopping trip. It allows Macy’s to offset rent and allows Finish Line to extend their top-line and bottom-line. Both brands have done a good job of allowing the other to protect their brand identity with no degradation of service or loyalty.
Shop-in-shop concepts can be a win win if the brand keeps their distinctive identity across the shop fit, merchandising and product mix within the retailer. This can only happen if brand merchants and ambassadors are embedded in the process. From buying to sales associates to visual merchandisers must be integral to the shop-in-shops success. I say this with the experience of working with Ralph Lauren and our Lauren shops at retailers across UK, Ireland and Europe. The success of our shop-in-shops were grounded in keeping our distinctive Ralph Lauren identity from building out the shop to the uniforms worn by the sales associates. We shared insights with the retailer and collaborated on buying decisions and marketing. It was a true partnership.
It is clear that the store within a store concept, as well as two or three stores within a store, are an integral part of retail’s future.
For instance, Target’s partnership with Ulta Beauty has proven highly successful, offering customers a dedicated beauty section within Target stores. This collaboration has increased foot traffic and provided a unique shopping experience.
When two or more stores within a single store deliver incremental foot traffic to the host store, without duplicating services or products, the outcome is generally positive for all parties involved, including both retailers, each brand, and the consumer at large. There are more advantages than risks.
Another notable example is the collaboration between Starbucks and Barnes & Noble, where customers can enjoy a coffee while browsing for books. This partnership has created a welcoming and productive environment for shoppers, blending the experience of a café and a bookstore under one roof.
However, there are risks, mostly for the host retailer. Customers sometimes fail to distinguish between the store within a store and the host, and the performance of the “store within” can severely impact the host store’s image, customer loyalty, and even profitability.
When the brands are not well-aligned, the host retailer may suffer from a confused brand identity, which can dilute the overall customer experience. This misalignment can lead to customers feeling disconnected or unsure about the store’s core offerings, potentially driving them away. Furthermore, if the “store within” underperforms or fails to meet customer expectations, it can reflect poorly on the host retailer, harming its reputation and profitability.
Also, there is the possibility of crossover inventory, as was the case with CVS and Target. There were times when customers were confused about whether certain items purchased from HBC were from Target or CVS when in the drug and HBC section of the store.
One potential solution is to implement clear and distinct signage that differentiates the host retailer from the “store within.” Additionally, training staff to guide customers and provide information about the separate entities can help alleviate confusion. Another approach is to use distinct branding and layout strategies, ensuring that each section maintains its unique identity while still complementing the overall store experience.
It is also important that there is a very well laid out plan for where consumers check out, how returns are handled, especially mixed returns, and by whom, and where.
Ensuring a seamless customer experience is crucial in maintaining customer satisfaction and loyalty. When the process of shopping, returning, and navigating the different sections of the store is smooth and intuitive, customers are more likely to have a positive perception of both brands involved. A well-coordinated and clear strategy can enhance the overall shopping experience, encouraging repeat visits and fostering a stronger connection with the customer.
Overall, the concept of a store within a store provides brick and mortar with one certain advantage over e-commerce.
This advantage lies in the tangible, in-person shopping experience that e-commerce cannot replicate. Customers can physically touch, try, and compare products, which can lead to higher satisfaction and fewer returns. Additionally, the immediate gratification of taking a product home right away is something online shopping cannot offer. Db
Store within Store is interesting in that the primary difference is that the Brand owner can somehow afford to most closely look after the product mix store by store, staff each store with experts and still make money. A Retailer could in theory get the same signage, watch and manage the product mix more carefully, and hire and train its associates just as well – but of course won’t do any of those things. There are a very few cases where having a store in store gets the Retailers access to product it can’t normally order (like Finish Line in Macy’s gets more Nike products into a Macy’s store than Nike would offer directly to Macy’s….) But for the most part you have to ask the question if Apple can staff and stock a Best Buy store with the best product and best expertise, why can’t Best Buy do that themselves? Never happen…
Ah! the ole’ “mop and pail”…now when were they last here on RW?? Back on topic: to me, store-within-store’s are usually a sign of two possible things: a very strong brand…or a weak brand; in the case of a Starbucks in a
Safeway –heck let’s give a nod to the frozen North and say ‘Loblaws’ instead – it’s the former; but macy*s and TRU, it’s the latter (techically more like two weak brands but…) There are a lot of both in this world, so I expect we’ll see more of these marriages of convenience.Starbucks inside grocery stores are a good example of the store within a store. My grocery store has one, and also a sushi store. We’re going to see a lot more of this because it makes sense.
Yes, like Starbucks in Target. In our local Target it is almost always busy!
Leveraging each other’s strengths serves both brands well. Both win if appropriately structured.
Store-within-store arrangements can be mutually beneficial and impactful for both the brands and the retailers who host them. However, retailers need to be very careful about which complementary brands they choose to do an store-within-store concept with and be mindful of how the relationship might evolve over a long term. Retailers should also be realistic about the traffic stimulation benefit a brand in an in-store concept can draw – it’s not always as much as, or as impactful as the retailer expects (or hopes). More traffic does the retailer little good unless it can be converted into additional sales, and that can be very challenging to accomplish. That all said, I think that there are still more pros than cons for the retailer and that’s why these arrangements will continue to be a fixture in the retailing landscape.
Store within a store concepts work when it makes sense. Ulta works in Target because both stores have a similar cool vibe. What didn’t make sense was Sephora inside J.C. Penney. Did Sephora customers shop at Penney’s pre-Sephora? I doubt it. Along the same line of thinking, the brightly lit and well-merchandised Sephoras inside Kohl’s stores look out of place amid all the clutter on the host sales floor.
I think Craig described it best: “A marriage of convenience.” Until it’s not.
When the right pairing emerges, there are definitely more pros than cons. To be successful, both brands must find value in the relationship — and it MUST be logical to shoppers. At a minimum, a successful store-within-a-store concept must have these three essential ingredients: 1) common target audience; 2) brand strength and reputation; and 3) shared strategy.
The “right” partnership can significantly benefit the retailer and their vendor partners. Ensuring that there is great synergy between the brands is critical. Having complimentary customer profiles certainly helps. It’s also critical that the partnership includes the right metrics to measure its success. Those metrics need to include more than just sales; they need to include traffic, changes in category performance, and local market share and space productivity reporting. As Kohl’s has learned, dedicated space or in-store reps that do not raise the performance of the departments around them are more of a drag on performance than a benefit.
Shop in shops have been around since the dawn of the department store where each specialty counter was staffed by a category “expert.” Newer concepts are actually separate companies/brands hosting the space and are good fits for today’s shrinking sq footage brick and mortar channels. Unless a retailer is replacing a solid private label business with a less profitable shop model, I like the synergy. Stores save on operating overhead and training–think cosmetic counters in major dept stores, and brands have the ability to own their presentation and customer information. I can see this trend expanding in the fitness/athletic space and areas where product expertise add value.
The store-within-a-store concept is a great way for retailers to attract new customers and offer complementary products. However, it’s important to think beyond just matching brands and consider the long-term benefits for both partners. While increased foot traffic is certainly a plus, the real value lies in creating a seamless experience that builds customer loyalty and encourages repeat visits.
This is yet another signal that many larger format chains (I am talking about you Department stores!) are in trouble and need to continue to be creative in order to drive foot traffic. In other formats this idea potentially drives traffic however that traffic is not going to come without promotion.
I suspect the idea is not rooted in revenue gained or customer experience enhancements, but in the offset of cost from the host store to the pop up store, and at that basic level it is a winner. From a consumer standpoint it is hit or miss.
This is a great avenue for emerging/hot pure-play ecommerce product brands to grow. This is a great way for retailers to increase traffic. If the fit aligns it’s a win/win.