Are “Mini Stores” the Answer to Brick-and-Mortar Woes?

The future of the retail industry lies in technology and e-commerce, as proven by last year’s record-breaking online holiday sales. According to ComScore, online sales rose 15% to a whopping $37.2 billion. As the industry adapts to omni-channel strategies, retailers that rely solely on brick-and-mortar stores are falling behind. Not only are today’s retailers introducing new technologies and e-commerce platforms, but they are also rethinking the very concept of the “store”. What does it take for shoppers to leave their computers and enter a retail location? The answer lies somewhere between convenience and the promise of a unique shopping experience.

The Shop-Within-a-Shop Takes Off

December retail sales were a wake-up call for department stores and general merchandisers. Overall, specialty apparel and accessories retailers fared better than their department store counterparts, with sales rising 0.7% compared to November. Meanwhile, department stores experienced a 0.2% decline in December sales.

To lure shoppers, many department stores and discount retailers are turning to the “store-within-a store” concept. Perhaps the most prominent example of this practice is Target’s recent announcement of “The Shops at Target”. These in-store shops are inspired by specialty retailers like the Candy Store of San Francisco or luxury boutique The Webster of Miami. The unique aspects of each shop are recreated in select Target stores, along with (crucially) a shopping experience reminiscent of browsing the original location. This is also the aim of Target’s new deal with Apple Inc., announced on the same day as The Shops at Target. Target will introduce Apple centers in 25 stores on a trial basis in 2012. Although Target currently sells some Apple products, the Apple mini stores will come closer to recreating the Apple store ambience in a more accessible setting.

Target is not alone in its adoption of the “mini-store” concept. In early December 2011, J.C. Penney announced its partnership with Martha Stewart Living Omnimedia Inc. to develop in-store shops featuring Martha Stewart products. The struggling Sears Holding Corp. is making efforts to lease square footage to outside retailers. In September 2011 the retailer announced deals that would bring a health club and a grocery store within the walls of two of its stores.

Convenience is Key

While shoppers are drawn to unique shopping opportunities like the limited-time mini stores introduced by Target, today’s shoppers also value convenience. Grocery stores and other food retailers are valuable shopping center anchors, drawing shoppers into retail locations as part of their weekly food errands.
Some retailers go a step further by adding food offerings to their repertoire. Many Wal-Mart and Target stores feature extensive fresh grocery offerings, and the new Wal-Mart Express concept aims to bring groceries and other products to urban areas. At Target, shoppers can even get their caffeine fix from in-store Starbucks cafes (first introduced in 2002).

Retailers are adopting other practices aimed at creating a more seamless in-store experience for customers, including mobile payment options, digital receipts, and kiosks tailored to customer needs. While enhancing the shopping experience or adding to the convenience factor are effective means of rethinking store formats, in today’s shopping world these efforts must also complement online strategy.

What other in-store strategies are effective in engaging shoppers?