How Shop-in-Shops Benefit Both Retailers and Brands

Posted Friday, May 02, 2014

PHOTO SOURCE: Minneapolis Star Tribune
PHOTO SOURCE: Minneapolis Star Tribune

Shop-in-shop, store-within-a-store, in-store shop, concession, in-store concept.  Whatever you call the concept, they could be defined as a designated space within a host retailer that is dedicated to a specific consumer brand, allowing them to sell goods under their own brand name. This retail concept is not new, but has gained momentum in the last couple of years. The beauty of a store-within-a-store is that both the consumer brand and retailer (typically big box retailers) are benefitting from creating these symbiotic arrangements. Some of the shop-in-shops have become so popular they are viewed as destination shops, where the consumer specifically heads to that store for that brand. 

Benefits of Retailer and Brand Collaborations
Brand manufacturers are rethinking ways to reach consumers directly and retailers are permitting them to make a clear brand and price statement at the point of purchase. Some specific benefits that make the arrangements a win-win:

  • Breathe new life into a large retailer by offering these specialty shops
  • Consumer brands are able to create a larger presence in the store
  • Shoppers have access to intimate brand experiences within the retail store
  • Retailers can designate space for a smaller shop, and they don’t have to worry about merchandising and filling the space
  • Shops become destinations and increase foot traffic into the larger store
  • Specialty shops can act as “pop ups” and create excitement around a product or brand
  • Online retailers can test out a brick and mortar space with a “shop in shop” experience
  • It is convenient for shoppers

Some Success Stories and Why
When successful, a store-within-a-store arrangement will improve the appeal of both brands involved.

  • A collaboration that many shoppers have become familiar with is the Sephora brands located inside JCPenney stores. This combo started up back in 2006 and, currently, there are more than 375 JCPenney stores that feature Sephora shops. Most of these spaces are around 2000 square feet and sell a large variety of beauty products. They have become a destination shop for many shoppers, which in turn, is a win for the struggling retailer.
  • In 2013, Samsung launched 1400 “Samsung Experience” mini stores inside Best Buys across the country. The kiosks have been an opportunity for Samsung to showcase their products and allow customers to have a hands on experience with their products while increasing their brand awareness. This year, Samsung plans to expand their mini stores in Best Buys in Canada and across Europe.
  • Best Buy just announced (as this article was being written) that they will update their home theater departments with dedicated in-store Sony brand shops at 350 Best Buy store locations,  calling the shops “Sony Experience at Best Buy”. They will be designed to offer product demonstrations and give consumers confidence when purchasing new technologies.
  • Online retailer, Bonobos, partnered with Nordstrom in 2012 to transform their online store into specialty shops within 20 Nordstrom locations. The brand has also opened 11 stores within Belk department stores. This has proved to be a great way for online only brands to test the waters of a brick and mortar concept, allowing consumers to interact with their products.

Some Bad Examples and Why
While many collaborations have been successful, some of these partnerships have brought to light some factors to consider when bringing in specialty shops to a larger retail store.

  • Know your customer base: When JCPenney started introducing boutique style shop-in-shops in 2012, it was nice for attracting a new generation of customers, but many loyal customers did not want to see upscale boutique shops and the change was too dramatic for them.
  • Target made a similar mistake when they partnered with high-profile Nieman Marcus in 2012 to launch a Holiday Shop, in which items were significantly more expensive than most Target brands. This collaboration did not bode well with the price savvy Target shopper.
  • Use brands that are recognizable to your customer: Target has partnered with several brands for specialty shops, to include Missoni, Jason Wu, and currently Peter Pilotto. While these may be great designers, they may not be recognizable to many Target shoppers.

KDM POP Solutions Group has a dedicated retail solutions division, KDM Retail, that works with retailers and consumer brands to create a distinctive environment that addresses how their consumer shops. In tune with the latest in retail design trends, we provide creative design services, store planning, decor, custom store fixtures, merchandising displays, signage and graphics. Whether a new store environment, a remodel or refresh, KDM Retail can manage and execute the entire project. Contact us today to see how we can help you create your destination shop.


Other related KDM Blog articles on Collaborations at Retail you might be interested in:

Tags: Best Buy , KDM Retail , Shop-in-Shops

Comments

Francesca Nicasio 05/06/14 1:36 PM

LOVE this post. It provided a great overview of the benefits of shop in shops, and I think it's great that you also included examples of what NOT to do. In addition to generating more traffic and buzz, launching shop in shops is also a good way to conduct tests. Some retailers do it to test the waters in a particular location or to see how consumers react to a new product or concept. We recently published a post relevant to the topic (click my username). Feel free to give it a read and let us know what you think!
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