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The shop-in-shop phenomenon

A win-win strategy to overcome nowadays challenges

 

Every other Wednesday, h/commerce provides in-depth analysis of the most impactful trends reshaping retail.

Consumers are increasingly demanding when it comes to shopping and are looking for brands that will fulfill all their needs at once. In this way, they are more likely to choose stores that make their life easier by enabling them to save their time, benefit from quality goods, have access to a large range of services and have a great shopping experience.

Moreover, it became really challenging for brands to satisfy consumers as the range of products or services, easily accessible on platforms such as Amazon, is increasing every year. These last months it became even more complex as a great number of stores had to close their doors multiple times to control the Coronavirus pandemic.

To cope with costumers increasing level of demand and the challenges of our unprecedented times, more and more retailers are adopting Shop-in-Shop. It could be described as a partnership consisting in providing a dedicated area in a store for another brand. As we shall see, benefits are multiple for both partners.

Joining forces to cope with the period

 

Lately, more than ever, shop-in-shop has been seen as a great opportunity to continue to provide consumers with their favorite items.

In 2020 Decathlon teamed up with the French chains Franprix and Auchan to keep its offer up. Some aisles of these supermarkets are now filled with Decathlon items to provide customers with their favorite fitness accessories while sport items’ distributors remain closed because of the pandemic.

Following the same model, a month ago the French supermarket chain Intermarché has partnered with the French clothing brand Gémo to offer Intermarché’s clients a selection from Gémo ’s 2021 SS collection in five of its supermarkets in France. ‘’We want to be present right where the customer is in order to simplify daily life with an affordable and good-quality offer’’, said Gémo’s CEO Philippe Thirache. At Intermarché, the president Vincent Bronsard said that the project ‘’demonstrates their constant efforts to bring satisfaction to customers during their shopping experience’’. The project will run for a year and will be displayed in 10 stores.

Credits: LSA

The current crisis has enticed brands to join forces, work on their synergy with shop within shop offers to ensure service’s continuity.

Boosting knowledge and expertise sharing

Sometimes, setting up a corner shop among the aisles of department stores allow retailers to answer more precisely to consumer’s needs and to stay up to date.

For example, the electricals retailer AO electricals announced at the end of 2020 the opening of five shop-in-shops in Tesco as part of a six-month partnership with the grocer. Its first ever in-store experience started at Tesco Extra in Middleton (UK).

It is a win-win deal for Tesco and AO electricals. First, it gives Tesco’s customers access to a broader range of products and AO’s technical expertise on electrical goods. Then, this partnership allows AO electricals to reach more consumers as it is the first in-store experience the online retailer has launched.

Credits: AO website

The French supermarket retailer Carrefour had also explored the shop-in-shop opportunity in 2020. Following a partnership with Cash Converters, Carrefour has introduced a new shop-in-shop called “Carrefour Occasion”, within some of its hypermarkets in France. This corner-shop allows customers to resell as well as buy a range of second-hand items. By making the most of Cash Converters expertise in pre-owned items, the retailer wanted to show its growing interest in circular economy. Cash Converters is managing these corners with its own on-site experts offering an assessment on the value of the item.

The two actors decided to focus on technology items such as smartphones and computers, but jewelry, books and bags can also be found in the aisles.

Ikea who teamed up with the start-up Optoro to reduce waste coming from returns is another example of a brand relying on a partner’s expertise. The furniture retailer used the start-up technology able to manage retailers returns and excess merchandise. In 2020 the partnership was available in 50 Ikea’s US locations.

With the continuous increase of consumers requirements, some retailers had made the choice to draw on other companies’ expertise to continue to offer a relevant shopping experience.

Managing floor space in the most profitable way possible

Shop-in-shops is a way to diversify services and products but also to share the store’s costs and to generate more traffic for both partners.

Recently, Asda has announced a shop-in-shop partnership with Accessorize and Decathlon at a supermarket in the West Midlands (UK). About the partnership with Accessorize, Asda confessed it was a test and learn project. However, the partnership with Decathlon is an extension to the grocer’s existing partnership. Recently, some reports said that Asda’s owners were hunting for other chains such as nails bars and cafes facilities to reduce grocery space in their supermarkets. With these extra services, they want to offer a shopping experience that online marketplaces won’t be able to provide. This diversification trial is seen as a great opportunity to drive footfall back in store. The aim is to create a one stop-shop offer allowing customers to achieve multiple activities in just a single-trip. At the same time, to shrink Asda’s grocery space could help the chain to manage floorspace in a more profitable way.

Also facing financial profitability issues, John Lewis is planning to launch hundreds of shop-in-shops inside Waitrose stores. The brand is also thinking of setting some smaller ‘local’ shops. The expansion of the partnership between the two brands comes as John Lewis forecasts to shut down several stores. John Lewis Partnership chair Dame Sharon White said in the Retail Gazette that the shop-in-shops would “help reduce property costs, enable cross-selling and offer a wider range of general merchandise online”.

Credits: Retail Gazette

For brand in difficulties, partnering with other retailers through corner shops help to maximize sales densities per square foot and improve their reach.

Why is it interesting?

These times, it has been quite challenging for retailers to satisfy their customers. Some of them had to close their doors for an undetermined period, other actors faced very demanding customers. These difficulties have forced them to find practical solutions.

Because of these uncertain times, partnering turned out to be a relevant strategy to ensure service’s continuity. As grocery stores will remain opened, joining forces with them allow ‘non-essential’ ones to still reach their customers no matter what.

Then, adopting shop-in-shop is a way to easily gain expertise to continuously meet the growing demand.

Finally, as it allows partners to share costs, shop within a shop strategy has a true financial profitability.

Thanks to the diversification it brings, shop-in-shops system proved to be a very good way to get customers back in stores and to reach new customers for both partners.

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