Dr Retail 18.03.21
Large retail chains are forever looking for ways to keep consumers coming back to their stores and with the COVID-19 pandemic accelerating the growth of e-commerce sales, retailers are finding themselves saddled with excess space. Retailers have been shifting to smaller store formats in suburban and neighbourhood locations, further prioritising the need to make hypermarket stores a destination in their own right.
Retail analysts have pointed to shop-in-shops as a growing trend and strategy for retailers. Shop-in-shops and concessions are nothing new, but with a tough economic climate further complicated by COVID-19, we expect to see more and more brands and retailers adopt this lower-risk growth strategy. In October 2020 and under new ownership, ASDA announced it would start hiring out space to other retailers and unveiled partnerships with B&Q, Greggs, Claire’s Accessories and toy specialist The Entertainer.
The strategy can have multiple benefits for both parties. For example, LVMH owned cosmetics retailer Sephora has partnered with department store Kohl’s who has over 1100 stores across the USA. Sephora will initially open around 200 mini stores. Kohl’s has traditionally catered to an older demographic and needs to widen it’s appeal to a younger audience, ensuring it remains relevant to a new generation of shoppers. Sephora has a cult appeal to the very shoppers that Kohl’s wants to bring through its doors. In return, Sephora is gaining access to a new shopper segment. Kohl’s stores tend to be locating in suburban locations rather than in shopping malls, so the partnership is giving Sephora a rapid opportunity for geographical expansion.
Therefore, shop in shops allow retailers to extend their offer rapidly at a lower risk level – by integrating existing tried and tested brands with their established assortments.
Here Valley looks at some examples:
Shop-in-shops at ASDA
Greggs’ tie-up with ASDA makes perfect sense; both retailers have a similar target demographic. The concessions give shoppers an added reason to visit ASDA and allows them to pickup their favourite savouries and baked treats all under one roof. The presence of Greggs is also bound to drive food-to-go sales for all meal occasions. Steak Bake anyone?
Greggs at ASDA
B&Q shop-in-shops at ASDA stores are giving shoppers access to paint products as well as tools, hardware and other DIY essentials. The tie-up brings convenience to customers of both brands and allows B&Q to extend it’s physical footprint without needing to take on additional units in its property portfolio. The presence of concessions from The Entertainer and Claire’s accessories makes selected ASDA stores even more of a shopping destination, giving a compelling reason to visit and the ability for shoppers to combine several ‘shopping missions’ under one roof.
B&Q at ASDA
Claire’s Accessories at ASDA
The Entertainer at Asda
Peloton – John Lewis Oxford Street
Peloton’s fast growth was accelerated even further during the COVID-19 pandemic, with frustrated housebound consumers willing to invest in new solutions for home fitness and distraction. Peloton spinning bikes combine the convenience of home fitness with the levels of motivation associated with being in a live studio. Whist John Lewis has announced that it’s planning to close some of its stores, they are opening Peloton ‘experiences’ in selected locations. This allows Peloton to allow more cautious shopper segments to test-drive the bikes before they commit to a purchase. Whilst Peloton’s website contains masses of video content, sometimes there’s no replacement for a high-touch, in store experience.
Apple and ULTA beauty at Target – USA
Target in the USA already has a successful omni-channel business but is looking to further bolster its in-store offer with mini-shops from both Apple and ULTA Beauty. According to Target, this is part of their strategy to bring even more choice and value to its existing customer base and giving them new reasons to increase the frequency of their visits. On average, a shopper may normally visit a department store about once per month. However, makeup and cosmetics are replenished on a more frequent basis and therefore the presence of ULTA beauty will hopefully draw Target’s shoppers into store more often. Whilst the miniature Apple stores won’t include repair or maintenance services, they will be an opportunity to expose the brand’s cult products to a wider range of shopper segments – especially those who prefer to visit a suburban Target store rather than visiting a shopping mall (which is where Apple’s flagship stores tend to be located). After all, for some people, a visit to the mall can be a nightmare worth avoiding at any cost.