Are Retail Shop-in-Shop Partnerships a Smart Loyalty Acquisition Strategy?
In today’s competitive retail landscape, simply having a loyalty program isn’t enough to cut through the noise and capture the attention of discerning consumers. In one recent survey, 63 percent of respondents said they base their purchases on the loyalty programs they’re in. Even still, retailers face increasing pressure to differentiate themselves and create more meaningful connections with their target consumers. Customers crave more than just discounts; they seek personalized interactions, engaging experiences, and a sense of community that motivates action.
Shop-in-shop partnerships — where brands build a defined area within the retail space of another brand — create unique, engaging experiences that go beyond traditional retail. These curated environments let customers explore new products and brands, participate in interactive experiences, and discover product features and benefits. The collaborations often provide a new convenience for shoppers alongside the thrill of discovery by transforming the shopping journey into something more memorable and, potentially, more meaningful.
The shop-in-shop model isn’t a new idea. As early as 1997, Apple’s partnership with CompUSA demonstrated the power of dedicated spaces within existing retail environments. Today, brands are increasingly integrating shop-in-shop partnerships into the core value proposition of loyalty offerings.
Enhanced In-Store Experience
Most retail sales (nearly 84 percent) still take place in physical locations, but growth is slow compared with e-commerce sales — 1.8 percent vs. 8.2 percent, respectively. Thoughtfully developed shop-in-shop partnerships can enhance the in-store experience, drawing in customers to physical locations, encouraging reciprocal brand discovery, spurring product experimentation, and opening the door to long-lasting loyalty.
It’s a Win-Win
Store-in-store installations allow brands to extend beyond traditional marquee locations and explore additional customer engagement methods. This mutually beneficial approach allows a host retailer to enhance its in-store experience with unique offerings aimed at attracting new customers and deepening engagement with existing ones. Meanwhile, the partner brand gains access to a wider audience, which can drive product discovery, nurture long-term loyalty, and increase customer lifetime value.
The shop-in-shop model is being adopted across a wide spectrum of retailers, from established partners to surprising new pairings:
- Kohl’s + Babies R Us
After the success of its partnership with Sephora, Kohl’s announced plans in 2024 to partner with baby-product retailer Babies R Us for 750 store-in-store shops and online sales of baby gear. Kohl’s hopes to deepen its appeal with expecting and current parents through an expanded assortment of trusted baby brands and a wider selection of products.
- Bed, Bath & Beyond + The Container Store
When Bed, Bath & Beyond was purchased by Overstock.com and all its store locations closed, many loyal shoppers mourned the loss of the iconic brand’s in-store shopping experience. Now the parent company is reintroducing Beyond-branded kitchen and bath products in co-branded spaces in more than 100 The Container Store locations, with the goal of leveraging Beyond’s IP, customer data, brand network, and affiliate relationships.
- Lowe’s + Petco
In 2023, Lowe's grew its Petco shop-in-shop partnership from 15 stores to nearly 300. The rapid expansion was part of Lowe’s larger strategy to serve rural customers. The shop-in-shop partnership offers rural populations the convenience of accessing essential supplies, expert advice, and services for their pets alongside Lowe’s comprehensive array of home improvement products. With more than 77 percent of U.S. households (102 million families) owning a pet, the convenience of one-stop shopping will likely fuel brand affinity and loyalty for Lowe’s and Petco.
With proper planning and strategic collaboration, a shop-in-shop experience can benefit the participating brands by boosting engagement and driving sales. Customers enjoy a seamless experience, discover new products, and often accelerate their loyalty rewards — all of which can galvanize lasting brand devotion.
Amy Farsht is senior director, partnership marketing at The Lacek Group, a company perfecting the art and algorithms of brand devotion.
Amy Farsht is senior director, partnership marketing at The Lacek Group. For more than 30 years, The Lacek Group has been perfecting the art and algorithms of brand devotion. We help world-class brands identify their highest-potential customers, engage them across channels throughout their lifecycles, personalize each relationship for optimal long-term results, and measure the true effectiveness of those efforts. The Lacek Group is an Ogilvy company.
