Will a store-within-a-store work for deli?

Discussion
Photo: Volpi Foods
Dec 21, 2017
Matthew Stern

Store-within-a-store concepts — featuring such brands as Starbucks, Sephora, Chobani and Samsung — have worked well for some big-name retailers. Now regional grocer Schnucks is trying out the model in a part of the store where you might not expect a third party — the deli.

In November, Schnucks announced the opening of an in-store shop showcasing artisanal cured meats by local specialty meat producer Volpi Foods, according to St. Louis Today. The Volpi shop at the Schnucks in Des Peres, Missouri is located near the store’s existing deli and features freshly sliced meats. The meat slicer is operated by Schnucks employees trained by Volpi staff, and customers purchasing products from the vendor check out at the Schnucks register.

The store-within-a-store model has proven successful in a few notable cases.

Best Buy, which struggled for some time as big box retail began to wane in popularity, boosted its appeal to customers and investors with a store-within-a-store strategy that, in giving floor space to manufacturers like Sony and Samsung, has been instrumental in the chain’s turnaround.

And popular makeup brand Sephora has all but kept J.C. Penney on the map with its store-within-a-store presence. Macy’s has partnered with Apple, Finish Line, Sunglass Hut and a number of designer brands on in-store shops.

At the grocery level, in-stores shops aren’t common. As part of a distribution deal launched in 2008, Murray’s Cheese in-store shops now operate in more than 350 Kroger locations. Kroger acquired Murray’s Cheese last year.

As part of the launch the concept, 365 by Whole Foods Market formed “Friends of 365” partnerships with largely local eateries that operate independently inside each store.

For Schnucks, it’s not immediately obvious if customers would sooner shop for artisanal meats at a branded store-within-a-store as opposed to a regular store-operated deli. The in-store proximity of the Volpi shop to the Schnucks deli could cannibalize sales.

But an increased interest in artisanal, local and “natural” products could drive customer traffic to the Volpi shop.

DISCUSSION QUESTIONS: Do store-within-a-store partnerships with local, artisanal brands make sense for grocers? Does the in-store shop concept hold the same value for grocers as department stores?

Braintrust
"Nothing can address shopper's desire for fresh, local, socially responsible and authentic more effectively than a valued local producer in your store."
"Customers can do their shopping in one trip, local brands get additional exposure and grocers can boost sales and reputation."
"Any development that helps break the mold of the current supermarket has to be regarded as a plus and makes sense."

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22 Comments on "Will a store-within-a-store work for deli?"


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Ben Ball
BrainTrust

Do these partnerships make sense for grocers … ? How loudly can I scream “YES!” in print? Nothing can address shopper’s desire for fresh, local, socially responsible and authentic more effectively than seeing a valued local producer in your store. This concept takes the Whole Foods approach to personalizing the farmers to a whole different level. It actually puts the local vendor in the store. I can’t wait for Mariano’s to put a Bende shop in their Chicago stores.

Ryan Mathews
BrainTrust

One caveat my friend. This assumes the store-within-a-store partner is — in fact — socially responsible, authentic and brand-resonant. This might not always be the case. And I think you have to understand that establishing dueling food claims isn’t the same thing as offering different brands of sweaters. So for example, if the store-within-a-store offers deli products that are better for you because they posses “Quality X” what does that say about Boar’s Head or any of the other deli lines? A gentleman of fashion such as yourself might wear Armani one day and Polo the next, but it’s unlikely you’ll eat great products one day and not-so-great products the next — at least not voluntarily.

I also think the department store model suggests a second caveat. It would be easy for a supermarket brand to lose itself in a flurry of departments within departments, especially since, with the notable exception of the Schnucks of the world, they aren’t very good at it in the first place.

Lee Kent
BrainTrust

Absolutely Ben! Having the Volpi products right there for the “splurge” can only be a plus. Will it cannibalize sales? I’m thinking not. If the consumer was buying all Volpi meats before then they probably were’t buying Boar’s Head and likely had to go shop somewhere else. Now more consumers can be introduced to the product as well as the convenience of shopping in one place. And, that’s my 2 cents.

Shep Hyken
BrainTrust

The concept of partnering with a local brand for a store-within-a-store makes perfect sense. It’s a win/win/win for all three parties involved; both retailers and the customer. This concept can work for many different industries, not just department stores and grocery. Both B2C and B2B can create the store-within-a-store concept.

Phil Masiello
BrainTrust

The store-within-a-store concepts, like the Sephora/J.C. Penney model and others, make sense because these are concepts with mass market appeal.

These models make sense for retailers who have excess space and do not have the core competency in the company they are affiliated with.

So it makes sense that in a grocery store having a specialty cheese shop run by a specialist would work. Deli is a staple in grocery stores. Cured meats however, may not be applicable to all of Schnucks’ stores. It may only work in some stores. But it certainly is great to see them trying different concepts to engage with their customers.

Ryan Mathews
BrainTrust

I think that depends a good deal on the grocer and the partner. In the case of Schnucks and Volpi it seems to work, but again I can see it failing if a retailer picked the wrong partner or if the the value proposition of the partner contradicted in some way the retailer’s own go-to-market strategy. As a practical matter the Boar’s Head contract essentially creates store-within-stores in many delis already since it requires that a high percentage of the case be filled with Boar’s Head products. The difference with Volpi is the upscale, artisanal angle which should work well at Schnucks.

As to the supermarket versus department store question, I’d say the answer is, no. Department stores have, in many cases, lost control of their in-store branding messages. It would be a shame to see supermarkets go down the same route.

Anne Howe
BrainTrust

I’m with Ben, the answer is yes. Grocers need to get more in touch with shoppers and stop being so afraid. So Harris Teeter, go ahead and get better bread!

Art Suriano
BrainTrust

The store-within-a-store seems to have a natural appeal no matter what it is and where it is. The minute a retailer puts up walls or sections off an area it creates curiosity and makes the customer think, “there’s something here I have to check out.” It stands aside from the rest of the store and for that reason it works. As long as the product(s) sold in the store-within-the-store is appealing, the concept will work well, and the retailer will see sale increases much more than if the same products were placed out on a shelve. This idea is right for grocers as well. I believe that Schnucks will have success with their store-within-a-store concept as would other grocers. How you present the store-within-a-store is essential and how you merchandise it is equally important, but if you do both correctly, you’re bound to have great success.

Adrian Weidmann
BrainTrust

The store-within-a-store concept is absolutely valued and sustainable. Allowing brands to represent themselves is smart business for brand and retailer alike. Brands and retailers continually argue as to who owns the customers. Retailers believe the shoppers are theirs — they came because of the name above the door. Brands believe the shoppers are in the store to purchase their products. While this argument prevailed, Amazon has been loudly eating both their lunches. The store-within-a-store concepts are the correct and viable solution. Let brands market and merchandise to control their own destiny. Retailers force them to do all the work anyway. Let them do it without tying their hands behind their backs with meaningless administrative and out-of-date policies.

Meaghan Brophy
BrainTrust

My answer is also a resounding yes. Shoppers want locally-sourced products, and if a grocer can partner with local vendors to supply that, that seems like a win for everyone. Customers can do their shopping in one trip, local brands get additional exposure and grocers can boost sales and reputation. This is a great partnership.

Dr. Stephen Needel
BrainTrust

As long as Schnucks is making money from this, it makes all the sense in the world.

Lyle Bunn (Ph.D. Hon)
BrainTrust

Absolutely YES, for every good reason, not the least of which is adding more vitality to the shopper experience through a product focus. Store-within-a-store brings new synergy to retail and the investment made by the consumer brand in promoting their specific products is an active and growing trend. Department and grocery have lots of latitude to create a collection of brands under one convenient roof.

Gene Detroyer
BrainTrust

Though it hasn’t been outside vendors, Wegmans has been doing this quite successfully for years. Worldwide, Eataly has been hugely successful in providing this concept. So the answer is yes. Most supermarkets can’t be experts in all things and when they try to, they usually come up way short. They should stick to the things they execute best and bring in others with different expertise to provide things that their customers might want.

William Hogben
BrainTrust

Most strip malls are already store-within-a-store, in that the stores on the strip mall make secondary sales to customers who come for the grocery store.

This is just moving those secondary stores inside the grocery store itself — and makes a ton of sense. It’s the supercenter model, applied with a little more nuance in this case.

Dave Wendland
BrainTrust

I’m a strong encourager of stores-within-a-store. Anything that creates shopper excitement, differentiates the experience and engages consumers is a good recipe. Schnucks’ deli concept is unique and I wish them well. However, it does run the risk of cannibalizing traditional deli sales and/or creating some confusion.

In general, the in-store shop concept definitely holds value for grocers. I’d love to see more in the produce aisle (pans, strainers, storage containers); paired wines in the meat and seafood areas is also logical. Hopefully silos will be torn down at grocery and the “total” consumer experience will be placed at the center of the discussion.

Roy White
BrainTrust

Any development that helps break the mold of the current supermarket has to be regarded as a plus and makes sense. That this initiative provides local, fresh artisanal brands makes it a double plus, and helps the supermarket evolve. Partnerships open up opportunities to access expertise which few supermarkets can provide internally.

Dave Wendland
BrainTrust

You’re spot on Roy. I love your comment, “Partnerships open up opportunities to access expertise.”

Harley Feldman
BrainTrust

Store-within-a-store concepts work with other categories and should work in the deli grocery. My local grocer is now selling the best sushi compared to other grocers, and I have moved my sushi buying there — increased traffic to the store. As consumers learn more about Volpi meats, the same increase in traffic at Schnucks will occur. More and more retail stores are moving in the direction of specialty offerings in order to distinguish themselves from the local competition and Amazon.

Determining the value of the in-store deli vs. department stores can only be measured by increased sales. The value will vary by category and products offered. Time will tell as to whether in-store deli offerings will be successful, but my bet is yes.

Cate Trotter
BrainTrust

These types of partnerships help establish the supermarket as the place to get everything you want — including your artisanal or local products. I suspect Schnucks is hoping that even if Volpi cannibalises some of its deli sales that those shoppers will also buy other things from the store. I think the aim is to get more people through the door and perhaps bring in a different type of shopper who wouldn’t normally visit Schnucks. On that basis this could be a valuable exercise, although I think a selection of the store-within-a-store partnership with a variety of local brands would be a bigger draw than just one.

Kai Clarke
BrainTrust

Store-within-a-store concepts can certainly add to a retailer’s ability to attract and retain customers, but there is a trade-off with return on floor space, product choice, and overall availability. Everything has a cost, and bringing in another supplier to take up floor space has a measured impact on profitability as well.

Ken Morris
BrainTrust

The store-within-a-store concept has proven to be a successful traffic and revenue generator for department stores and it will likely be a success for grocers. The key is to partner with a brand that has a loyal following that will inspire shoppers to seek it out in your store.

Many consumers are taking a greater interest in their grocery purchase decisions and supporting brands from the local region, like farmers, fishermen, coffee roasters, etc. which is manifested in the locavore phenomena. Volpi, a 110 year-old company with a strong reputation for quality, is a great choice to test the store-within-a-store concept for Schnucks.

Michael La Kier
BrainTrust

Store-within-a-store partnerships can make a lot of sense. It does not require a local, artisanal brand. It simply will require an authentic brand with a real reason for being there. Rather than look at the department store model, perhaps the airport model would be most appropriate to look at. By bringing in known brands/retailers plus local favorites, many airports have increased concession and retail sales dramatically.

wpDiscuz
Braintrust
"Nothing can address shopper's desire for fresh, local, socially responsible and authentic more effectively than a valued local producer in your store."
"Customers can do their shopping in one trip, local brands get additional exposure and grocers can boost sales and reputation."
"Any development that helps break the mold of the current supermarket has to be regarded as a plus and makes sense."

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