July 27, 2022
By Julie Cullen, Sr Content Manager of CMA | SIMA

Implications of store within a store concept on category management and shopper insights

Shops-in-Shops, stores within a store, SWAS; known by different names but remains an expanding concept within retail affording mutual benefits to category management and shopper insights. Originally pioneered by the department store industry to bring category expertise and brand partnerships under one roof, other retail channels have embraced this concept in recent years including mass and drug with the most recent being the debut of CVS and its new skin care center.

Stores within a store provide complimentary services for both the ‘home’ and ‘guest’ retailer or brand related to category management and shopper insights including:

  1. Expertise outside the home retailer to ‘outsource’ a category or subcategory
  2. Mutually beneficial foot traffic for home and guest retailer or brand/one stop shop
  3. Keeps shopper in the store longer than otherwise would, obtain new shopper insights on adjacencies, complimentary products, etc.

When you walk into a store you might not realize how many stores within a store there are. Some partnerships have been around for years. Let’s take a deeper dive into some of the most recent partnerships in beauty, skincare, and toys:

  • (Launch: 2022, Category: Skincare) CVS Skin care:

CVS is the latest to jump into the store within a store format. Announced in June of 2022, CVS has launched a pilot Skin Care Center in 3 locations in NY and CA. It will offer new prestige beauty brands, allow shoppers to customize their skincare routine, while also having licensed estheticians onsite to answer any questions shoppers might have.

  • (Launch: 2022, Category: Toys) Toys ‘R’ Us and Macy’s:

The once beloved toy store is being welcomed back into a natural partnership with Macy’s. By the end of the year, Macy’s will open Toys R Us locations within all of its approximately 500 retail stores. The in-store shops will have a designated area where customers can play with toys, while also having a photo op with everyone’s favorite giraffe.  The in-store shops will range from 1,000 – 10,000 sq. feet, and may flex up an additional 500-3,000 sq. feet during the holiday season.

  • (Launch: 2021, Category: Beauty Products) Target and Ulta:

In 2020 it was announced that these two retailers would partner on more than 100 Ulta stores within Target stores starting in 2021. Currently, there are over 200 shop-in-shops open with a goal of having 800 Ulta stores within Target in the next few years. These use approximately 1,000 sq. feet of floor space and showcase prestige brands, while also offering two rewards programs.

ULTA products at Target
Source: CMA | SIMA Store Walks
  • (Launch: 2021, Category: Beauty Products) Kohls and Sephora:

Initially launched in 200 stores in 2021, “Sephora at Kohl’s” is a 2,500 sq. foot premium beauty destination at the front of the store. The two retailers aim to grow the partnership to $2 billion annually, extending to over 800 stores by 2023. Kohl’s CEO Michelle Gass reported a mid-single-digit sales lift at those locations compared with the rest of its chain, and shared that over 25% of customers coming into the store to see the new Sephora store fronts are new to Kohl’s.

Sephora at Kohls
Source: CMA | SIMA Store Walks
  • (Launched: 2019, Category: Toys) Target and Disney:

Target has undergone a massive remodeling project that will be completed in late 2022. Over 1,000 stores have been remodeled, and Target’s goal is to make these stores more welcoming, while also improving layouts and adding more items within the store. Just before holiday 2019 Target debuted its partnership with Disney in 25 stores initially. The branded “shop-in-shop” layout averages 750 sq. feet of floor space adjacent to kids clothing and toys. There are now 53 Disney store shops inside Target stores, expanding to more than 160 by the end of 2022.

Disney products at Target
Source: CMA | SIMA Store Walks

Store within a store has been a concept that has been around for quite some time. Some retailers see this concept as a way to reenergize its store fronts while also expanding variety/exclusive items, maximizing convenience, and generating a new shopping experience. Some of these stores within a store can be a permanent fixture while others can be considered a temporary “pop-up shop” concept. What are the implications to category management and shopper insights?

  1. Retailers and brands can use these shop-in-shops not just to merchandise prestige products but to offer a curated shopping experience and drive trial, something difficult to achieve online.
  2. It is not a surprise the most recent announcements above focus on the skincare, beauty, and toy categories that are highly experiential. If your category has similar characteristics, it might be a fit.
  3. Mine these stores for shopper insight data on adjacencies and complimentary products to feature and share them with your brand and retail partners to drive even more benefit from these partnerships.
  4. Retailers with struggling foot traffic, or DTC brands struggling to get traction, might consider partnering with a larger retailer on a store within a store to benefit from a broader audience.

While we have just touched on a few stores within a store, retailer investments in these concepts are considerable, and don’t show any signs of slowing. The CMA and SIMA, under parent company ARC, is currently facilitating a Space Planning Charter with a variety of retailers to discuss challenges and best practices in space management today. Contact our member services (memberservices@catman.global) for more information and to get plugged into more space planning content.