When Samsung Store and Best Buy merge

Are Shop-in-Shops for Consumer Electronics worthwhile?

In 2014, Best Buy announced that they wanted to update their home theater departments with dedicated in-store Sony brand shops, called the “Sony Experience at Best buy”. Since then, 350 Best Buy store locations offer customers to test, try and experience how all of the Sony products work together. Using touch-screens, visitors can control and engage with various content demonstrations on the TV wall creating an immersive brand experience for the customer. This store concept is called Shop-in-Shop and a lot of manufacturers and brands are interested in participating in such a partnership with store owners. But how effective is this store concept really?

What are the Advantages of a Shop-in-Shop Store Concept?

A shop-in-shop is a designated area within a retail store that is dedicated to a specific consumer brand, allowing them to sell goods under their own brand name. Most of the time, brands have to pay rent for the store section which can be either be a fixed sum or calculated wholly or partly by the actual turnover. This can be great opportunity for retail stores to pass their own rental costs on to brands and product suppliers. For brands, on the other hand, a shop-in-shop offers the possibility to reach and win over more offline customers. Especially for online-pure player, opening up a store within a store is a great way to gain experiences in brick-and-mortar retail and understand offline customer shopping behavior.

Shop-in-Shop Concept Samsung
Image: Global Instore

In 2013, Samsung launched 1400 shop-in-shops inside Best Buy across the USA with the goal to bring a range of products to their customers allowing them to test and experience the products in real life. With the help of a store, Samsung can not only convince customers of their quality products but also create an immersive brand experience with the help of unique store section designs and high quality customer service. Often, the store associates who work at the shop-in-shop are only responsible for that store section and thus, are highly qualified to inform customers about the products. Sometimes they are even employed by the brand itself. The focus isn’t only on selling the products but creating a unique shopping experience for the customers which is why Samsung called their mini store concepts the “Samsung Experience”.

Are Shop-in-Shops worth it?

One noticeable characteristic of a shop-in-shop is the design of the store section. The shop has to stick out from the rest of the store without being too different. The shop has to be designed in a way so that customers engage with the products. By using modern technologies such as big displays, touch displays, product demos or VR-technology customers can fully immerse in a brand’s world. A great example is the Google shop-in-shop at Saturn, a German consumer electronics retailer. It was launched in 2013 as Google’s first shop-in-shop in Germany and offers features such as a big screen called the “Liquid Galaxy” where customers can play around with Google Earth.

Saturn profits from Google’s positive brand image which helps the German retailer to further establish itself as a highly competent specialist in consumer electronics. The interactive experience at the shop-in-shop can increase customer dwell time and the improved customer service will motivate customers to continue shopping in other sections of the store, thus, making additional purchases more likely. A shop-in-shop can be a great foundation for future projects that both parties will profit from – assuming that the shop-in-shop actually attracts more customers.

Tracking the Shop-in-Shop success with Retail Analytics 

If the shop-in-shop generates low customer traffic, however, this investment will not pay off for the brand. At the same time, retailers can suffer from an ineffective shop-in-shop because they lose the ability to react to short term fluctuations in demand by changing the store sections. At the same time the retailer also depends more on the brand’s shop-in-shop sales. Are the shop-in-shop sales lower than the retailer’s opportunity costs, he loses potential sales opportunities. Furthermore, there is the problem of brand identity: the retailer might not be seen as its own brand but rather as a small shopping center. That is why the success of a shop-in-shop is also important for the retailer which is why both want to keep track of customer traffic in that section.

Shop-in-Shop Concept
Image: Global Instore

With the help of modern Retail Analytics technology retailers can identify the footfall traffic in the shop-in-shop using Wi-Fi sensors. Based on predefined KPIs such as dwell time retailers can then analyze the efficiency of the store section and the overall store layout. These insights are not only relevant for the store owner but also for the brand renting the space. The brand wants to know whether the shop-in-shop actually attracts more customers and thanks to the data it also gains important insights into offline customer behavior. The store owner can give the brand access to the customer data insights and in return share the costs of the retail analytics service. Based on these insights both the retail and brand can create new marketing strategies to increase visitor rates and sales.

Customer Expectations are shifting

Since retail has entered the digital age customer expectations have changed drastically. Consumers want a shopping experience that caters to the individual wishes and needs of each customer instead of simply offering standardized solutions. Selling products in stationary retail isn’t enough to get people into the stores. With the help of a shop-in-shop system retailers and brands can work together to create a new and immersive brand experience that will improve the shopping experience and thus, increase sales and brand satisfaction.

Brand and store owner profit from this cooperation by merging their customer bases, expertise and image. Thanks to Retail Analytics both parties get important insights into customer behavior in store and can share the costs of the service. This data pool is more relevant than ever for successful store management and marketing strategies.