Store-Within-A-Store

Recent discussions about brick-and-mortar stores focus on the feared retail apocalypse – the death of traditional shopping. With the industry constantly evolving, however, the end of in-person shopping may not be as near as we thought. Retailers have sought ways to take back some of the market share captured by e-commerce. One of those ways is through the concept of a store-within-a-store.

What is it?

Like the name suggests, having a store-within-a-store occurs when a retailer acts as a host, allowing one or more brands to operate independently within their store. This partnership between brand and retailer is a mutually beneficial one that helps both parties increase revenue and grow their respective markets. Think of Sephora within Kohls, Claire’s within Walmart, and more recently, Ulta within Target.

Benefits

Additional benefits for the brand side include the ability for them to save money by reducing much of the overhead it costs to operate an independent store. Further, if a host retailer generates a lot of foot traffic throughout the day, brands within the retailer wind up selling more products than solely operating out of a standalone store. And, all of this can be accomplished without losing coveted brand awareness.

For some retailers, the store-within-a-store model is a great way to revitalize an old, aging brand. The model creates a new shopping experience, establishes variety, and maximizes convenience. Imagine being able to walk only a couple feet to grab a product you otherwise would have had to travel through traffic to get.

Its History

The store-within-a-store concept is not a new one. Since 2006, cosmetic retailer Sephora has been operating in-store kiosks in participating JCPenney stores across the country. What initially started as a small project that targeted a handful of JCPenney stores has been expanded to almost 650 of the 875 stores in operation. While the concept pre-dates the pandemic, the new realities forced on retailers since 2020 clearly play a part in how companies think about their real estate strategies. External stressors like inflation have caused retailers to pivot to operate more efficiently.

Its Future

While the concept originates with real estate, the success or failure of these kind of ventures depends on the execution. It’s about the experience. How well do they execute it? How well do they allocate resources to make it succeed? What’s the marketing communications around it? Those that have answers to these questions have proven most successful.