Store-in-Store Boom

Amazon and Aldi inside Kohl’s… Carsaver inside Walmart... Local businesses inside of Whole Foods’ 365 stores. Roy White details how retailers are leasing out parts of their bricks-and-mortar sales floors for non-competing or complimentary operators in a modern twist on traditional concessions.
Roy White
October 2018
 

One of the oldest concepts in retailing is store-within-a-store. Department stores have been doing it for years. They call it a “leased department” or “concession.’ Usually it's used by well-known fashion brands and jewelry companies to maximize their presence at a big retailer that attracts lots of floor traffic.

Now, store within-a-store is finding a home at new locations. Hy-Vee, Walmart, Kohl’s, and Whole Foods have all recently experiemented with the concept.

Some retailers use the concept to reinforce current offerings with a higher quality extension. An example is Schnuck’s store within a store created in partnership with a premium specialty meat company, Volpi Foods, to supplement its deli operation.

But most look to a high-profile insertion with utterly different products designed to surprise and intrigue shoppers.

Kohl’s is a leader. The apparel-oriented department store opened an Amazon store within a store offering the online retailer’s devices such as Alexa. Data suggests it’s working quite well with stores featuring the Amazon units generating 8.5% more traffic than neighboring stores – and shoppers are staying in the store the same length of time as all Kohl’s customers. Now Kohl’s – not to be stopped – is testing Aldis in their stores.

Whole Foods’ Plant & Plate store within a store is as big and different as it gets: Large footprint, special décor totally distinct from the host store’s, completely separate product line consisting of high-end housewares and lifestyle products. More are on the way so it apparently is working. Walmart, too, has something very different: Car Shopping Centers in partnership with Carsaver, an online car buying service. This is also working, as another 250 are planned based on the performance of the initial test.

Hy-Vee installed Basin and Beauty units in around a dozen supermarkets. Basin is an up-and-coming retailer and supplier of high-end bath and beauty products with stores in resort areas such as Orlando and Las Vegas. The in-store units feature beautiful fixturing completely different from a supermarket’s, and the 2,200 sq. ft. units definitely stand out in a Hy-Vee grocery store.

The store-within-a-store concept is one of many factors that are beginning to reshape the retail store into an entity that can better appeal to the 21st century customer. In most cases, it is being used for shock effect, and if that is what it takes to reinvent the traditional store and transform it once again into a growth vehicle, more power to it.For PLMA Live, I'm Roy White.

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