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Yes, you read that title correctly. “Shop-in-Shops” are the new retail trend taking the world by storm. As the pandemic raged on this past year, brands looked for ways to sell more product through brick and mortar. While e-commerce sales boomed many brands were hit hard with a downturn in sales at physical locations. However, places like, supermarkets, hardware stores, and convenience stores often saw an uptick in business. But how could other CPG, and direct-to consumer brands, or even better yet; other retailers capitalize on this traffic and selective sales uptick?

The answer for a few was what is being referred to as “shop-in-shops.” The concept itself is where a brand owner, or another retailer, takes up physical space outside of standard merchandising in another retailer’s store. In many instances that store is then fit to provide a designated & branded selling space for the secondary company’s products.

Target, Sephora, Kohls, and most recently Lowe’s have all gotten in on the craze. These shop-in-shops are really a concession stand for loyalists and opportunity based convenience shoppers within another store. The featured brand or retailer pays additional rent in many instances to the retailer where the products will be showcased. This helped many retailers mitigate operational costs these past pandemic years as well. The larger retailer is also often widening their target customer base by attracting the featured brand’s shoppers to their space where complimentary products can be purchased before walking back out the door.

Image Courtesy of Target

In some cases, a branded space for a smaller retailer inside a larger one can help brands to move into new, attractive locations that they couldn’t afford to on their own. Prime retail real estate is often accompanied by a high price tag, so a concession or pop-up can make these location more accessible for brands of all sizes. These partnerships have cushioned the pandemic blow to many smaller retailers and brands as well. The cost of a shop-in-store is much less than a full physical location, and their is already going to be foot traffic at the larger retail location. Thus, the smaller brand doesn’t need to even worry about the initial cost of advertising for a new location. By opening shop-in-shops, the smaller retailer or brand can measure the response from customers in a specific market and identify locations where demand may be high enough to warrant a standalone store in the future. The potential for cross sell is also immense, if their core customers are already frequenting the bigger retail location.

Let’s showcase a recent example: Lowe’s and Petco have partnered to have Petco shop-in-shops at select Lowe’s stores in 2022 as part of a pilot program. Lowe’s will add a curated selection of branded content (see main post image) from Petco that will feature tech enabled displays and a branded space within Lowe’s locations. Specific private label pet food brands already selling at higher volumes in these markets will be featured in the Lowe’s stores in hope that food buyers are already picking up supplies from Lowe’s stores and can grab their pet food while on location out of convenience. Lowe’s will also offer services through Vetco, which is Petco’s vet services brand. Vaccinations microchipping, and prescription pickup will now be available at these pilot Lowes locations. The move is part of Lowe’s “total at home” strategy to feature products and services of more needs their customers have around the house. Lowe’s has already taken steps to target pet owners by allowing those consumers to bring their pets into its stores and by offering items catered to them, including Stainmaster products, dog beds, dog doors and cleaning supplies.

As brands explore the need for more space in their retail partners’ stores, it’s inevitable that Bluewater will be there alongside them to provide support with displays, retail technology, fabrication, and installation. Learn more about our retail services today. With free consultations, you don’t have much to lose.