The Anti-Mall: How Innovative Store Partnerships Are Changing the Face of Retail

The shop-in-shop retail concept is growing ⁠— and for good reason. Learn everything you need to know about this burgeoning retail model in this RIS exclusive.
Jamie Grill-Goodman
Editor in Chief
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As shopping malls concentrate on their own evolution, a new trend in retail is growing outside of mall doors retail partnerships.

Consumers are starting to see more and more retailers popping up inside of other big box, grocery, and department stores. These shop-in-shops are creating fun and exciting brand experiences outside of their own store fleets, while the retailers housing them are developing into one-stop retail destinations where shoppers can peruse a plethora of retailers in one place. 

Target Ulta
Target and Ulta Beauty in-store experiences are planned for 800 locations in the years to come. Credit: Target

The shop-in-shop retail concept, where a retailer takes a dedicated selling space in another retailer’s store, is growing — and for good reason. As consumers clamor for convenience thanks to both the pandemic and time-strapped modern life having one stop makes shopping easier.

This shopping philosophy is exactly why malls are what they are, but big box “anti-malls” provide the speed of a smaller walking footprint, often mixed with the convenience of retail technology like buy-online-pickup-in-store (BOPIS), scan and go, and self-checkout. The pandemic kicked these experiences into high gear, as shoppers concerned about COVID-19 turned to e-commerce pickup options and quick in-and-out shopping. While only 5% of global consumers still report not feeling comfortable at all about returning to stores, according to Mood Media’s “2021 Shopper Sentiments” report, these digital habits remain sticky.  

"Beyond shifting channels — where they shop — consumers have also changed how they shop,” IDC writes in “FutureScape: Worldwide Retail 2022 Predictions." "Consumers have developed strong expectations around omnichannel experiences such as return-anywhere option; BOPIS; curbside pickup; and inventory visibility. These shifts in shopping behavior are now here to stay."

Omnichannel experiences offer perks for physical retailers. RIS found shoppers who visited a store to pick up their online order often add to their purchase. In fact, 41% of retailers report that shoppers’ average BOPIS order increased by 1-2 items during pickup. What’s more, 24% of retailers report that their average order size increased by 5 items or more. Once inside stores, consumers are proving themselves to be open to discovery.

Target, which has been at the forefront of developing shop-in-shop partnerships, has noted this evolution of shopping habits. CEO Brian Cornell claimed that convenience is “not either or, it’s an ‘and.’” Even during the pandemic, customers have gravitated toward both the store, and online orders and contactless fulfillment, he said in January at NRF’s Big Show. Inside the store, Cornell predicts the “ability to find one location where you can consolidate shopping will be an important feature for many of us going forward,” making retail partnerships important.

Innovative Shop-In-Shops

One of Target’s most noteworthy partnerships opened last year: Target and Ulta Beauty. The in-store experiences will be in more than 100 Target stores and on, with plans to reach a total of 800 locations in the years to come. Each “shop-in-shop” is located near the existing Target beauty section and features specialized displays, discovery zones and on-trend, season-specific products. What’s really interesting is loyal shoppers can rack up rewards from both Target and Ulta Beauty’s loyalty programs; the programs combine to include more than 100 million users. RISfound 55% of retailers report their loyalty members have made a purchase in the past three months, thus it stands to reason that doubling up on loyalty plan benefits could draw existing and new shoppers to these shop-in-shops.

Target Disney
Disney store at Target locations have music, interactive displays and a seating area for families to relax, watch Disney movie clips, and more. Credit: Target

“The partnership needs to benefit both parties or it won’t succeed long term,” Nikki Baird, VP of retail innovation at Aptos, tells RIS. “It should be with a brand strong enough to draw traffic on their own, but also a brand that makes sense to the retailer’s existing shoppers.

In this vein, Target also has a retail collaborationwith Apple, which now brings Apple products together in one space inside the store. The new space has been designed for customers to experience the products through demonstrations and with the help of Target Tech Consultants, who receive specialized training from Apple. Having knowledgeable staff on hand continues to be a draw to get consumers offline and into brick-and-mortar stores.

Not forgetting their younger audience, the first Disney store at Target locations opened in 2019 with music, interactive displays and a seating area for families to relax, watch Disney movie clips, and more. Target announced last year it would expand the number of Disney shop-in-shops inside Targets to over 160 by the end of 2021. The news of Target and Disney’s expansion came at the same time as Macy’s announced it had partnered with WHP Global to bring Toys"R"Us online at and to more than 400 Macy’s stores nationwide in 2022. The Toys"R"Us experience on Macy’s website lets shoppers search by age, toy type, character, and brand. Within the Toys“R”Us shop-in-shops roll out, customers will be welcomed by Geoffrey the Giraffe before discovering dedicated sections by age, interest, and category, with interactive experiences, activation centers, and iconic elements throughout, Macy’s has said.

Image and video courtesy of Kohl's. ©2017 Kohl's Department Stores, Inc."
More than 25% of Sephora at Kohl's shoppers are new to Kohl's and they are younger and more diverse, Kohl’s CEO Michelle Gass said last November. Image courtesy of Kohl's. ©2017 Kohl's Department Stores, Inc.

While Macy’s tapped toys for the shop-in-shop space, Kohl’s rolled out “Sephora at Kohl’s” experiences last year to around 200 stores. The retailers plan to bring “Sephora at Kohl’s” to at least 850 Kohl’s stores by 2023. The beauty care spaces measure more than 2,500 square feet and offer around 125 hair, fragrance, makeup and skincare brands. They’re staffed by Sephora-trained associates to provide personalized service, and Sephora purchases made at Kohl’s stores and on its website are eligible for Sephora’s Beauty Insider rewards benefits.

“As we've said from the beginning, this is a game-changing partnership for us,” Kohl’s CEO Michelle Gass said on the retailer’s earnings call last November. “In short, Sephora at Kohl's is working.” Gass noted that more than 25% of Sephora at Kohl's shoppers are new to Kohl's and they are younger and more diverse. She also said roughly half of customers buying Sephora are attaching at least one other category in their purchase across all lines of business.

In addition to the Sephora partnership, Kohl’s also completed its nationwide rollout of its Amazon returns program in 2019, where shoppers can return Amazon orders in stores and Kohl’s will pack, label, and ship the return for free. 

Out of the Box Partnerships

A hammer and dog food? Groceries and shoes?

Retail partnerships and collaborations aren’t just for big box retailers and department stores. As the concept becomes more fashionable, other segments are trying their hand at pairing up.

For illustrative purposes only. Credit: Petco
Lowe's + Petco locations will offer a selection of Petco's pet services, including Vetco vaccination clinics, microchipping, prescription pest prevention, and mobile grooming. For illustrative purposes only. Credit: Petco

Home improvement retailer Lowe’s and Petco recently announced they are working together to bring a store-in-store experience to life. Launching with a pilot store at Lowe's Alamo Ranch in Texas in February, the companies expect Lowe's + Petco to expand to 14 additional Lowe's locations by the end of March 2022. Petco products will be available to purchase in store or on to be picked up curbside, in contactless pickup lockers or at the customer service desk at no extra cost. Lowe's + Petco locations are also expected to offer a selection of Petco's pet services, including Vetco vaccination clinics, microchipping, prescription pest prevention, and mobile grooming at select times and locations. Pilot locations will staff knowledgeable Petco employees during peak hours to offer pet-focused guidance.

"For many of our customers, their pets and their homes top the list of things that matter most, especially after two years spent mostly together within the same four walls," said Bill Boltz, Lowe's EVP of merchandising. "This partnership enhances the total home solution we offer them by bringing home improvement and pet care products, services, and expertise together under one roof."

The pandemic has shifted how consumers, and retailers, think about the “home.” Grocery store behemoth Kroger clearly had this in mind when it decided to collaborate with Bed Bath & Beyond to directly offer Kroger customers an extensive selection of “the most sought-after” goods for the home and baby products carried by Bed Bath & Beyond Inc. The two are teaming up online as well in a small-scale physical store pilot at select Kroger Family of Companies stores beginning this year.

DSW Designer Shoe Warehouse shop-in-shops in Hy-Vee stores. Credit: Hy-Vee

“This strategic online collaboration and in-store pilot will provide Kroger shoppers easy access to essential home and baby products alongside their favorite grocery staples – continuing to fulfill our commitment of providing our customers with anything, anytime, anywhere,” said Rodney McMullen, Kroger’s chairman and CEO.

While Kroger tests the waters, another supermarket retailer has been trialing retail collaborations for some time. Hy-Vee kicked off its partnership with DSW Designer Shoe Warehouse parent Designer Brands Inc. in April of 2020. The partnership includes an online experience and several DSW Designer Shoe Warehouse shop-in-shops in Hy-Vee stores. Last year, the grocer also partnered with online retailer Pair Eyewear to bring Pair Eyewear kiosks to select Hy-Vee locations. The first kiosk is located inside the new “reimagined” Hy-Vee in Grimes, IA, but the grocer plans to open more than a dozen in-store Pair Eyewear kiosks within the year.

Hy-Vee’s Grimes store also features the first Johnson Fitness & Wellness showroom of several scheduled to open. The in-store fitness equipment showrooms showcase several types of fitness equipment for customers to view and try for themselves. The showrooms are digitally supported, with a kiosk and QR codes available for customers to order from the Johnson Fitness & Wellness online platform.

Johnson Fitness & Wellness showrooms in Hy-Vee are digitally supported, with a kiosk and QR codes available to order products online. Credit: Hy-Vee

“As part of our mission to making customers’ lives easier, healthier and happier, we are deeply invested in the health and wellness journey of our customers,” said Randy Edeker, chairman, CEO and president of Hy-Vee. “Our new partnership with Johnson Fitness & Wellness allows us to diversify and expand upon our current health offerings to provide our customers with all the tools they need to live a healthy lifestyle.”  

If that’s not enough of a one-stop-shop, Hy-Vee grocery shoppers can even get their nails done at W Nail Bar, a partnership that kicked off last year. The W Nail Bar at Hy-Vee is a full-service nail bar in four Hy-Vee locations that offers such services as manicures, pedicures, nail art, waxing, and tinting, among other things.

The Mall and the One-Stop-Shop

While earlier reports painted a bleak picture for malls, top tier and outdoor malls may be rebounding. In 2021, visits to the Mall Index, which looks at 100 top tier indoor malls and 100 outdoor malls throughout the country, were up 52% year over year, and down just 10% compared to 2019.In Q1 of 2021, visits to indoor malls were down 24% compared to the same quarter in 2019, yet by Q2 this number had dropped to 11% and by Q3 and Q4 it was down to 2% and 4%, respectively. 

This indicates that visitors who had kept away from malls did so because of the wider situation and not due to any shift in consumer sentiment or demand,” said

Hy-Vee brings Pair Eyewear kiosks to select locations. Digitally supported kiosks showcase brands in a smaller footprint. Credit: Hy-Vee.

As consumers return to in-person shopping, top malls continue to reinvent themselves as entertainment destinations, seeking their place in the modern retail landscape and welcoming back shoppers as the health crisis changes. But for standalone retail stores, strategic partnerships position them to enhance convenience for customers, attract new customers, boost sales and basket size, and gain customer data.

Your web browser is the ultimate one-stop shop and can never be matched by a physical store in that regard,” says Baird. Shop-in-shop is about highlighting the curation expertise of other brands. Kohl’s and Sephora, Target and Ulta (and Disney and CVS) – they are trying to ‘borrow’ the curation expertise inherent in the brands they’re partnering with. Retailers are looking to become chosen destinations that also can potentially refresh their assortments (or their partners) on a more frequent basis, thus driving more interest and traffic.

Baird warns there are also potential downsides to consider.

“Retailers in these partnerships are basically outsourcing their assortment expertise to another company. They are relying on other brands to drive their traffic. At that point, they risk becoming purely a real estate play. There’s also the question of data and who owns it and who gets to keep it ultimately. With the retailer providing the tech, they’re collecting all the customer data, but if they don’t have buyers and category managers with the expertise to use that data (because they’re not the ones ultimately making those assortment decisions), the data itself becomes less valuable – it’s data, and not insights. Retailers need to weigh these risks carefully.”

While there are many questions for retailers to ask themselves before diving into retail collaborations, done right, these pilots can create more than just a convenient one-stop-shop. They can engage and inspire shoppers, interweave loyalty, and attract new consumers. And they might just alter the face of retail while they’re at it.