After these unstable years of pandemics, large retailers are looking for ways to continue attracting customers to the physical store. Store-in-a-store is a good strategy for customers to visit the store more often.
Since the beginning of the pandemic, grocery supermarkets and hypermarkets have proven to be the most resilient businesses. Other retailers know it, which is why it is becoming a trend. The store-in-a-store concept has resurfaced since decades ago they already existed.
STORE IN A STORE TARGET-ULTA
For example, the American chain Target has incorporated mini Apple stores in some of its centers. In this way, they ensure that they provide all the services that their customers need, avoiding visiting the dreaded shopping centers. Sephora’s direct competitor, Ulta has also partnered with Target to have an in-store space within its centers. In this way, Target also expands its beauty offer, both high-end brands and cheaper products, thus attracting audiences of different ages and purchasing power. The exposure that Ulta achieves by being in the Target centers has allowed them to grow steadily and solidly.
Actually, Target already works with the collaborative in-store model, since 2015, the hypermarket pharmacies are CVS, the largest chain in the United States. They have more than 1660 locations within Target centers throughout the American territory.
STORE IN A STORE · KOHL’S – SEPHORA
Another example is another American chain, Kohl’s. They partner with the Sephora beauty chain and currently have 200 locations. However, they intend to extend their commitment to more than 850 stores offering the Sephora experience. Kohl’s provides cross-service with its partner in-store pickup, easy returns, loyalty program.
This partnership will replace the one Sephora previously established with JCPenney due to its bankruptcy situation. This collaboration enables Kohl’s to attract a younger audience with a broader range of beauty products. On the other hand, Sephora takes advantage of the large number of mall locations where Kohl’s is and where Sephora does not reach. It should be noted that both Sephora associations have a more distant target from Sephora. Sephora has always advocated offering brands other than those found in department stores and hypermarkets. However, it would be necessary to review, which brands are offered in these store-in-a-stores since they must be adapted to the demographics of their consumers. If Sephora ends up selling mass-market trademarks, it would not be upholding its brand values.
Within these synergies, the knowledge of the employees is very important. Attendees at Sephora or Ulta have great product knowledge. If Target or Kohl’s employees do not equal that level of knowledge, the user experience provided is inferior and does not represent the brand. To avoid this, employees of Apple spaces within Target will be technology consultants and will receive training directly from Apple to avoid not offering the same brand culture as in its Apple Stores.
STORE IN A STORE · SAKS – BARNEYS
Another example of store-in-a-store capabilities is NYC’s classic Barneys. In 2019, the store chain declared bankruptcy by closing all of its stores. At the end of 2020, Barneys has managed to resurface thanks to the space it has in the famous Saks chain of stores in NYC. Thanks to this collaboration, the classic New Yorker of high-end fashion.
The key to success will be an offering tailored to the demographic visiting the store. For example, in the synergy that Sephora and JCPenney had, it would not work to have very high-end products like Christian Dior and Chanel, since price points are important and JCPenney´s customers might not be the right fit for Sephora.
Advantages of these synergies:
- Traffic. Gaining customer traffic.
- New customers. Winning new customers.
- Shopping experience. New shopping experiences encourage customers to spend more time in-store and create a more engaging shopping experience.
- Saving. Cost savings for both. The host receives an amount for the rental of the space and for the guest, the mini store is a much lower cost.
- Offer expansion. Complement the shopping experience through the boutique approach of expanding the services in which they do not want to compete.
- More competitiveness and profitability. Partnering with product brands outside the host’s core business is challenging in terms of SKU management, staffing, inventory, more developed supply chain relationships, etc.
- News. The host store can offer new products to customers without having to invent concepts or assortment.
- More clientele. More varied clientele for both.
- Territorial expansion. The low cost of a store-in-a-store allows the invited brand to open more mini-stores in more locations.
- Results measurement. The invited brand can measure the response of the customers in the different locations.
- More services. The invited brand can take advantage of their host’s services such as same-day pickup, flat-rate home delivery, etc.
- Omnichannel. Catalog of the invited brand, on the host retailer’s website.
Advantages for the consumer:
- Convenience. In the same space, to be able to find an extensive assortment of both brands.
- Safety. Little by little, we return to normality, but the consumer is still aware of avoiding unnecessary visits to stores. Therefore, the store-in-a-store is a good option to take advantage of the trip to the physical store and visit several brands.
- Accessibility. Those people who have not had the opportunity to visit traditional Ulta or Sephora can now get to know it thanks to this store-in-a-store. It opens up market share in places where they do not have a presence.
- Greater success. By having and testing the products in the physical store, the possibility of error derived from the online purchase decreases considerably.
Conclusions:
Ultimately, for a successful brand association, research, preparation, and goal setting are critical. In these dizzying times of changes in customer behavior as well as the general retail landscape, these partnerships allow a more profitable use of space, increase pedestrian traffic, they develop new strategic capabilities thanks to learning the behavior of new consumers in new locations and the continuous development of relationships with customers. If the partnership between the two brands is right, both can benefit from the strengths of the other and offer a better value proposition for consumers of both brands.
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