How a Store-within-a-Store Strategy Benefits Both Parties
Store-within-a-store”, also called “shop-in-shops”, “in-store concepts” and “concessions” are effective strategies not just for department stores, but also for big-box retailers and some specialty retail stores. Whatever you call the concept, it is basically defined as a carved out space within a host retailer that is dedicated to a specific consumer brand. These aren’t just boutique areas, the spaces are controlled by the brands themselves; allowing them to sell their goods at their price point, under their brand name, with their brand look feel and even their own employees. They also bring with them the outlook and expertise of their own brand, regardless of the retailer’s culture.
The allure of a shop-in-shop is that both the consumer brand and host retailer are benefitting from creating these symbiotic arrangements.
Benefits of Retailer and Brand Partnerships
This time last year, we posted a popular blog on this same subject. While the clear benefits of these collaborations remain relatively the same- namely as a way to drive traffic and profits for both parties- the concept has gained more momentum.
Some specific benefits that make the in-store partnerships a win-win include:
Shop-in-shops become destinations, broadening the retailer’s appeal and increasing foot traffic
Retailers don’t have to worry about inventory, merchandising or managing the appearance of the space
It’s convenient for shoppers and adds variety to the store’s offering
Specialty shops can act as “pop ups” to jump start a new business
Online retailers can test out a brick-and-mortar space at a lower risk
Breathe new life into a dying retailer
Brands are able to create a larger presence via more locations
Store-within-a-Store Success Stories
When successful, a shop-in-shop arrangement will improve the appeal of both brands involved, creating a win-win. “Stores with these stores-within-stores have higher returns on investment and sales per square foot, and the margins are better as well,” stated Christopher Svezi, an analyst at Susquehanna Financial Group, told the Pittsburgh Tribune.
J. C. Penney (JCP) and Sephora. A partnership that began in 2006 enabled the beauty retailer to enter new and smaller markets, while expanding JCP’s reach as a destination for beauty products. JCP introduced Sephora to 25 more stores, bringing the total to about 500, each with an average footprint of 2,400 sq ft.
“Sephora is one of the most powerful and exciting beauty concepts in the world, and we want to leverage that reputation to drive the growth of Sephora inside J.C. Penney,” said Ivy Spargo, senior VP and general merchandise manager for Sephora inside J.C. Penney. Conversely, Satish Malhotra, executive VP for Sephora inside JCP stated that “working with J.C. Penney has proven to be a valuable partnership that represents one of our largest growth initiatives in the U.S. With our one-of-a-kind beauty collaboration, we are able to reach more markets where Sephora does not exist and introduce prestige makeup, fragrance and skincare brands that may not be available in many of these cities.”
Best Buy, Samsung, Sony and more. In 2013, Best Buy successfully launched 1400 “Samsung Experience” shop-in-shops inside their stores across the country. The kiosks have been an opportunity for Samsung to showcase their products and give shoppers a hands on experience. Last year, Best Buy expanded its store-within-a-store program by updating their home theater departments with dedicated in-store Sony brand shops called the “Sony Experience at Best Buy”. They also renovated most of their stores to carve out retail space for Microsoft, Pacific Kitchen, and Magnolia brands.
“I think Best Buy is brilliant in following this strategy, and coexisting on the same distribution platform with other strong brands,” Robin Lewis, CEO of the retail newsletter The Robin Report, told the Minneapolis Star Tribune. “That big box becomes kind of an enclosed mini-mall.”
Breathing new life into RadioShack. According to a recent article in Retail Dive, in a deal that came out of bankruptcy court to save RadioShack, the mobile company Sprint, will operate a store-within-a-store concept in most of the remaining 1740 RadioShack stores. According to Sprint’s press release, “Under the terms of the new agreement, Sprint would effectively operate a store within a RadioShack store, occupying approximately one third of the retail space of each location.”
What’s different about this approach is that the storefronts will be co-branded. Sprint says it will more than double their retail store presence (they currently have about 1,100 stores), which is a priority for Sprint CEO Marcelo Claure, who praised RadioShack for their “incredible store locations.”