Capturing Holiday Sales with the Store-Within-a-Store

The shop-in-shop trend has grown into an industry segment grossing $10 billion annually. Learn how brands can pick the right complementary partners in order to capture more walk-in customers.

By Joe Scaretta

Joe Scaretta
Joe Scaretta

The holiday shopping season is both the most magical and maddening time of year for consumers and retailers alike, and in recent years, the push toward online shopping has placed a strain on brick-and-mortar companies, which require ample foot traffic in order to stay competitive.

One way for physical retailers to stand out is to offer a temporary, themed “shop-in-shop” in order to capture more walk-in shoppers. The store-within-a-store model is part of the pop-up shop trend, which has grown into an industry segment that rakes in $10 billion annually, according to PopUp Republic, a niche service provider. Recent successful pairings include Sephora and J.C. Penney Co., Finish Line and Macy’s and Best Buy and Samsung.

Symbiotic relationship

A truly beneficial partnership for all, both the consumer brand and retailer benefit from the shop-in-shop arrangement. A fresh brand can breathe new life into a major retailer by offering new and exciting products, while consumer brands gain new visibility and create a greater presence in the store. Large retailers also don’t have to worry about filling up space with their own merchandise, while consumer brands can become destination shops in and of themselves. Shop-in-shops are good for consumers, too. Conveniently, shoppers get access to intimate brand experiences within a retail setting.

But, in order for a shop-in-shop to be successful, brands must pick the right complementary partners.

Consider your needs

As a brand deciding on a retailer—usually a big-box retailer—to pair with, it’s important to consider your mission for opening a shop-in-shop, the amount of space you will need and other relevant location preferences (outdoor areas, parking, etc.). Understanding these factors will allow you to more easily determine the right location that best suits your needs. An example of a brand perfectly utilizing a large space is Sephora and J.C. Penney Co.’s partnership, which began in 2006. Today, there are nearly 400 J.C. Penney Co. stores that feature Sephora shops. Most of these spaces are around 2000 square feet, sell a large variety of beauty products and have become destination shops for many consumers.

In 2013, Samsung launched 1400 “Samsung Experience” mini-stores inside Best Buys across the country. These successful kiosks allow Samsung to not only showcase its products but also increase brand visibility.

Understanding the customer base

By the year 2020, the consumer intelligence firm Walker predicts in its recent report, Customers 2020, that customer experience will overtake price and product as the key brand differentiator. It’s not just the physical space that is important. Brands must also understand the types of customers who frequent these retailers.

Online-only retailers can also use the shop-in-shop model to test out a brick-and-mortar space and better understand their customer base. In 2012, online retailer Bonobos partnered with Nordstrom to transform its online store into specialty shops inside 20 Nordstrom locations and 11 Belk department stores. Allowing customers to interact with Bonobos products in person proved to be a successful way to test the waters of a brick-and-mortar concept.

Management is key

Whether opting in with a single pop-up location or planting firmly with standalone stores to meet the expectations of consumers who demand the best of both worlds, alignment in goals, design along with effective implementation and management is mission-critical to a company’s success.

CEO & co-founder of CS Hudson, Joe Scaretta leads his firm in delivering turnkey services and purpose-built facility solutions within the retail, restaurant, health-care, industrial and commercial sectors.