Are In-Store Shops a Problem for Department Stores?
By Tom Ryan
Part of the
problem with department stores, according to Lee Peterson,
has been the arrival of in-store shops. The EVP of
brand & creative services at WD Partners and RetailWire BrainTrust
panelist believes in-store shops have not only cluttered selling floors
and led to stores losing their identity, but have also taught department
stores’ best brands how to open their own stores.
Also known as
shop-in-shops, in-store shops began appearing in force in the late eighties
as valuable floor space was set aside for the most productive vendors.
Designed to create a specialty store “feel” within the department store
environment, most shops feature attractive fixturing, cohesive merchandising,
tailored music and dedicated staffing. Other retail channels also have
created dedicated space for key brands.
But Mr. Peterson
believes the prime beneficiaries of in-store shops at department stores
have been the brands. While in-store shops initially gave brands a block
of selling space and more in-store marketing clout, they’ve also worked
as training grounds for exploring their own stores.
“At first, the
eyes you’ll get from being a shop within a shop are very attractive, but
eventually, the real benefit will be to cut out the middle man and get
out to retail on your own,” said Mr. Peterson. “Sure, retail’s not easy,
but in this day and age especially, there’s certainly enough retail experts
out there to help you be successful in your planning and execution.”
the major downside is that as brands become cooler, they either can start
demanding better terms and conditions or start opening up shops across
To keep in-store
shops “fresh and unique,” Mr. Peterson believes that stores have to continually
create new spaces for the latest, hip brands and he noted that “there are
always enough new, cool brands to go around if you are in tuned with the
market.” But he also said this can be a risky strategy given the investment.
always right, but like anything to do with trends and fast moving consumer
desires, as long as you’re right more than you’re wrong, you’ll do very
well,” said Mr. Peterson.
A more effective
– or less risky – alternative would be for department stores to somewhat
return to their former model in which the hot brands were mixed among assortments
and trends drove the store layout.
like the Forever 21 model of brand within brand versus the shop within
shop concepts of old,” said Mr. Peterson. “Just get the hottest brands
in your store — forget about letting them have a ‘shop’ — keep them hungry.
Spread the ‘hot’ brand around your store in coordinated groups that fit
in with several other brands, including (and especially) your own. Whole
Foods is actually very good at this with their 365 brand as it blends in
with all kinds of great products from around the world and provides great
choice without denigrating the mother ship.”
Questions: Has the arrival of in-store shops been positive or negative
for department stores and other retail channels? What changes would you
like to see in how they’re set up or operated?