The store-within-a-store concept is nothing new. It's been used in a wide variety of retail channels. Often it involves largely non-competing merchants such as a toy or office supply chain getting an aisle inside a supermarket, a beauty products retailer inside a department store, etc.
More recently, according to a Wall Street Journal article, the store-within-a-store model has caught on with luxury icons such as Dior, Gucci and Prada that are looking to maintain control over brand presentation, prices and sales. The brands lease space and staff it.
The push for store-within-a-store is largely the result over unhappiness with the discounting that took place with luxury brands in 2008. A number of high-end merchants cut prices up to 70 percent on some luxury merchandise.
Saks is one of the luxury chains that is open to letting brands manage space within its stores. It has worked with Prada on a store-within-a-store in its New York flagship location.
"It's very selective," Stephen Sadove, chief executive of Saks, told the Journal. "We're not doing this broad scale. We do this where we believe it can be a win-win."
Still, many retailers are reluctant to carve out space within stores to let suppliers operate their own businesses. A disagreement between Prada and Barneys New York led the brand to pull its women's line from the department store chain. The space is now devoted to another designer, but operated by Barneys.
A RetailWire poll in January of this year asked how successful store-within-a-store concepts were in building sales for retailers. Sixty-two percent said the concept was "somewhat successful," 17 percent answered "very successful," and seven percent "somewhat unsuccessful."