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Facing increasing expense as rent prices continue to rise, the store-within-a-store concept is quickly becoming a popular and beneficial solution for retailers.
The store-within-a-store concept, also known as ‘buddy deals’ or ‘store shares’, is where a retailer hosts another brand within their retail space. Think Giraffe and Harris + Hoole in Tesco or Caffe Nero in House of Fraser.
‘Buddy’ brands often complement one another, for example adding a food and beverage offering within a fashion or grocery store as in the above examples. Adding another level of diversity, particularly with an F&B brand, allows a retailer to provide a better in-store experience – something which is increasingly important in the battle against online. This gives consumers another reason to visit your shop and stay for longer, which can boost footfall and drive engagement within your store, with opportunities for cross-selling often boosting sales for both parties.
However, these types of retailer partnerships can also result in friction between the brands, in the worst cases resulting in legal disputes – something the Government are warning brands considering such a move. Simple things such as opening hours, stock space and front of shop branding can all cause disagreements and should be agreed between the brands before a partnership is formalised to help avoid tensions down the line.
The original ‘buddy deal’ trend setters are petrol stations. With many chains providing branded food and drink such as Costa, Starbucks, Greggs and Subway, the partnerships appear to work extremely successfully in this model. However, in most cases the ‘buddy’ brands are seamlessly integrated into the petrol stations, with no separate staff or exclusive areas within the garage forecourt. We believe this concept of seamless integration is one which retailers should learn from when adopting similar partnerships.
Many argue that a good way to ensure such deals work is for the main store to own the smaller one; Tesco, for example, acquired food brand Giraffe and is a majority shareholder in coffee chain Harris + Hoole. This means that the store-owning retailer has more control over the positioning of the ‘buddy’ brand, helping to avoid competing interests and disagreements. However this isn’t always feasible, especially where the ‘buddy’ brands are successful chains in their own right. Furthermore, larger brands need to be careful not to dilute their portfolio too far, without ensuring their core offering is right – see our previous blog on Tesco’s plans for growth and our note of caution.
Ultimately the store-within-a-store concept needs to be about matching the right brands together to drive mutual benefits. Finding a balance between ensuring both companies’ target consumers match, and therefore won’t be put off by a partnership, and overlap, ideally introducing new customers to both brands, is a challenge. Retailers must question whether a ‘buddy deal’ is the right decision for their brand in the long-term, as well as considering the short-term benefits!
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