To Draw Customers, Retailers Invite Other Companies Inside

By Lauren Zumbach
Chicago Tribune

WWR Article Summary (tl;dr) As the retail industry struggles with how to compete in the online world, several traditional retailers are experimenting with everything from pop-up shops to mini stores staffed by another company’s employees. For example at J.C. Penney’s you can now find mini Sephoras inside more than half of J.C. Penney’s retail locations.

CHICAGO

Maybe a store divided can stand?

Last month, Macy’s, Kohl’s, Nordstrom and J.C. Penney all reported drops in comparable-store sales compared with the first quarter of last year, blaming online competition and shoppers’ continued reluctance to spend.

One strategy traditional retailers are taking to fill too-big stores and spice up offerings is handing over some of that space to other sellers.

Retailers from Macy’s to RadioShack are experimenting with everything from pop-up shops to mini stores staffed by another company’s employees. The idea of opening stores-within-stores isn’t new, but it does seem to be “taking on more importance than in the past” as retailers look to maximize profits and make stores more enticing, said Arnold Aronson, partner and managing director of retail strategies at consulting firm Kurt Salmon.

“The retail industry is really struggling and losing share to the online world, so any clever new ways to still pay your bills and deliver a return at the end of the day is really powerful,” said Sucharita Mulpuru, an analyst with Forrester Research.

But the stores-within-stores strategy, while smart, is probably better seen as a boost for department stores that “still have life in them” than a rescue for foundering retailers, she said.

“For those that really need to rationalize a lot of stores, I don’t think stores-within-stores will save them,” she said.
Here’s how some companies are handling stores-in-stores:

J.C. PENNEY
The department store chain doesn’t initially seem like a likely partner for beauty giant Sephora, Mulpuru said, but the 10-year-old partnership seems to be working.

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