Store Within a Store

Brick-and-mortar retailers are looking for innovative ways to increase foot traffic. As shopping trends like online ordering, home delivery, and curbside pickup keep shoppers out of stores, “in-store convenience” has become a challenge.

One in-store draw used by retailers for years that has seen a recent resurgence is Store Within a Store. These retail partnerships give customers a reason to walk into a store. They also provide the retailer with added profits in rental fees and impulse buys.

What Is Store Within a Store?

Store Within a Store (SWAS) refers to a brick-and-mortar retailer renting space in their store(s) so another company can set up a separate, independent shop. These independent shops vary widely in size and product or service offerings. Examples include Starbucks in Target and hair salons in Walmart stores.

Benefits of Store Within a Store

The Store Within a Store partnership carries many benefits for the hosting retailer and can be a lucrative venture in terms of both profitability and marketing.

1. Increased Revenue

Retailers see increased revenue from the Store Within a Store partnership on two levels. First, from the fee paid for the rental space. Whether the business renting the space makes a profit or not, the hosting retailer has turned that space into automatic revenue.

Second, the hosting retailer can pick up impulse purchases from traffic drawn in by the business renting the space. Many Walmart stores rent space to hair salons. A customer can book an appointment and shop for items while they are already in the store. Walmart is now scoring profit from the rental space and additional purchases.

2. Versatile Commitments

If a business wants to enter into a Store Within a Store agreement with a retailer, the time commitment can be flexible depending on the product or service.

Big box retailers like Target and Walmart have entered into many long-term Store Within a Store agreements. Walmart has rented space to McDonald’s restaurants, hair stylists, and even dry cleaners. Target has rented its store space to Starbucks, Pizza Hut, and CVS pharmacies. These are all long-term commitments covering multiple stores.

However, the Store Within a Store agreement can be arranged for smaller, seasonal times as well. The first quarter of every year brings pop-up offices in retailers for tax prep companies. Cellular companies and broadcast network services also set up shop in retailers for limited offers or new product rollouts.

3. Marketing Advantage

High end companies like Apple have set up small shops in big box retailers. Not only does this lend credibility to the retailer, but it’s easy destination marketing for Apple’s messaging (i.e. “Find more Apple products like these in your local Target store.”).

A big marketing advantage for the retailer is the product or service being associated with their store. Customers may not even realize the Store Within a Store concept. They most likely see the retailer as taking care of all their needs in one trip instead of different businesses within the retailer.

4. Ideal for Small Businesses

For the small business wanting to rent space from a large retailer, the big advantage is low overhead. Renting a small space within a retail store cuts back on having to invest in a separate building, utilities, and more.

The other advantage for the renting business is the “fish where the fish are” strategy. When a large retailer has a solid customer base ideal for the smaller business’s product or service, it only makes sense to set up shop in the middle of them. Examples include a coffee shop that sets up in a large bookstore or cell phone carriers in electronics stores.

Why Is SWAS Growing More Popular?

While Store Within a Store has been a retail tactic for decades, it has seen a resurgence in recent years. As stated above, shopping trends like home delivery and curbside pickup make it easy for customers to shop without entering the brick-and-mortar store. This has caused retailers to look for new SWAS opportunities to give customers a reason to step inside.

The majority of shoppers still enjoy seeing, touching, and trying physical products in a store. The entire in-store experience needs to be positive, so SWAS offers a creative way to freshen up brick-and-mortar offerings. Customers can be enticed to walk into the store and see what’s new, see bonus products and services, and return to a physical one-stop-shop.

SWAS and the Future of Brick-and-Mortar

The VCR did not eliminate movie theaters and email did not eliminate the postal service. Online shopping will not eliminate brick-and-mortar and SWAS plays a big part. As Store Within a Store offers new experiences for the shopper, retailers should seek more opportunities for SWAS for one big reason: Gen Z.

Gen Z is the youngest group of shoppers in the market. A recent Vogue Business study showed Gen Z is a true omnichannel shopping group. They are not exclusive to one channel; they shop in stores, online, and whatever suits them best. For fashion purchases alone, the study found they are almost 60% more likely to shop and purchase in a store.

Shoppers in the Gen Z demographic prefer experiences over items. Creating new experiences and offerings with Store Within a Store caters to this new generation of customers. For older age groups drawn to the allure of online shopping, SWAS can still help.

Store Within a Store helps draw in that online shopper by becoming a partner rather than a competitor. Brick-and-mortar does not need to compete with online, but learn to work with it creating the true omnichannel experience. A SWAS appointment, product demo, or consultation can be scheduled online to be performed in the store. These are unique opportunities to give the store a local feel in an online world.

Store Within a Store at Walmart

Walmart does run traditional Store Within a Store partnerships. Space is rented at the front of the store to local and national businesses. However, Store Within a Store also has another meaning in the Walmart culture.

Walmart store associates are encouraged to take ownership of their departments. They are taught to know the best and worst performing items. Associates are sometimes challenged to come up with creative ways to display merchandise to increase sales. Taking this ownership makes their area their own store within the larger Walmart store. This Walmart Store Within a Store mentality has been in practice since founder Sam Walton promoted it in the company’s early years.

Conclusion

A retailer renting space to another business can be a win-win. It’s a great way to get customers into the store and offer products and services not competing with the retailer’s offerings, but improving the shopping experience.

To learn more about driving sales and working better with your Walmart buyer, request a free consultation from 8th & Walton today.