Earlier this year, Target US opened 17 Apple store-within-store “experiences”. The trial format was designed to attract new customers by leveraging the powerful pull-factor of the Apple brand. The experiment has been so successful that Target is now more than doubling that number of stores ahead of the Christmas period, claiming that “the strength of our assortment of national and owned brands, the expertise of our team members and the incredible value we offer make Target an unmatched destination for electronics and accessories.”
Target already has hundreds of other store-in-store brands across its 1900 shop network, with Disney, Ulta Beauty and Starbucks all prominent across the fleet. This approach allows Target to better utilise excess floor space whilst simultaneously attracting new customers to its stores and cross-selling to existing customers. Win-win.
For those brands considering new stores within department stores – brands like Apple and Disney – the obvious advantage is that they can broaden their reach without incurring the usual setup and run costs of a standalone store site. It is also critical that they find the right brand ‘fit’ in order to maximise the opportunity of gaining new customers.
In another example, US department store chain Kohl’s recently commenced a partnership with beauty retailer Sephora, with 200 shop-in-shops already established and hundreds more in the pipeline. Like Target, Kohl’s is seeking to leverage the prestige of a brand like Sephora in a category they had never really owned. Sephora-at-Kohl’s is a “fully-immersive, premium beauty destination” deliberately located prominently at the front of selected Kohl’s stores. Sephora will gain access to tens of thousands of new customers from the Kohl’s network of more than 1,100 stores across the US.
With Sydney and Melbourne finally moving past intermittent store shutdowns, Australian shoppers are finally flocking back to stores. Whilst online has effectively saved retailers over the past year, it can never fully replace the experience enjoyed by customers when shopping in stores. And whilst online continues to grow, more than 80% of all retail still occurs within the physical environment. However, for retailers to thrive beyond the pandemic, they will need to ensure they provide a great shopping experience.
Wesfarmers has embraced a ‘lite’ version of store-in-store by combining the massive online range of its Catch brand, with the national store network of Kmart and Target stores. Catch online shoppers are now able to collect their orders from their local Kmart or Target locations, with the stores hoping to entice additional in-store purchases from these customers. The future of online retail is clearly intertwined with seamless interactions with stores.
The merging of shopping and experience can perhaps best be illustrated through the new Lego store which opened in Canberra this week. The 250 square metre store showcases an enormous collection of Lego, including new and exclusive products. Lego Australia GM Matthew Robertson notes, “it's more than just a store. It's part store, part museum and part playroom. It brings you the chance to interact and play with a product, in a fun and bright environment." Now that is an experience.
