Marketing strategy

Marketing strategy behind Target, Ulta shop-in-shops

Marketing such sites is a delicate balance of collaboration, largely predetermined by contracts. Many shop-in-shops are simple real estate transactions in which a brand rents space from the larger store and is able to operate and brand it as they wish. But some transactions go further and include revenue-sharing agreements, such as the smaller store paying its host a percentage of sales. Marketing agreements, including brand identity for the smaller store, are also included in the contract phase. This is the case with many retail partnerships in China, which pioneered the concept successfully, according to Kahn.

At Target, each shop-in-shop is unique from the others, according to a spokesperson, who notes a “collaborative approach with each to branding and marketing.” Ulta mini stores are staffed by Target employees who have been trained by Ulta and also have improved lighting so consumers can see beauty products better.

“Every aspect of the store experience has been carefully crafted to celebrate this perfect pairing, including Ulta Beauty’s unmistakable orange awnings and bold, vivid graphics beautifully woven into the existing Target store,” Haus says, noting that, as on the store design, the Ulta and Target teams are working “in lockdown” on marketing. These efforts include co-produced ad and social content, influencer engagement, and a TikTok challenge.

Kohl’s Sephora effort is similar. The retailers collaborated on pop-up activations, social sweepstakes, influencer campaigns and prioritization of Sephora in Kohl’s messaging across all channels, according to Greg Revelle, chief marketing officer at Kohl’s.

“These are full Sephora boutiques in our stores, creating a completely personalized experience for our customers,” says Revelle, adding that the 2,500 square foot stores have specific fixtures and lighting, like a standalone Sephora. “As soon as a customer walks into Kohl’s, they will see the massive Sephora brand entry, which is a big, bold statement that not only captures the attention of our customers, but also shows our deep commitment to this partnership.”

At a time when all marketers are looking to strengthen connections with consumers, the shop-in-shop concept gives brands more control over the customer experience than they would have if they were just stocking up. products on the shelf. The brand within the big brand has the advantage of controlling its own logistics and brand image.

“As we move into this omnichannel world and the complexity of managing this 360 degree, 24/7 customer experience, it only makes sense that the store and the brand want to control this as much as possible” , says Kahn.

Additionally, since most retailers now have their own media networks, marketing new stores is easier to do on existing channels like newsletters, email notifications and websites, according to Kaminkow.

“All of these assets have been grouped together in an interesting way for other retailers to jump on,” she says. “You are doing something that will create value for properties or brands.”

Of course, retailers also need to do their homework. A retailer like Sephora or Ulta would want to make sure that a new shop-in-shop isn’t too close to an existing standalone store, which could cannibalize sales. Additionally, brands need to share consumer data in their relationship so the mini-store knows which products to stock for certain geographies and communities, experts say. Stock is smaller and more organized, so brands need to make sure they’re not wasting valuable shelf space on the wrong items.

Shop-in-shops can also boost loyalty programs. At Target, the Target Circle loyalty program is tied to Ulta’s Ultamate Rewards membership, so shoppers can earn points for both programs. Kohl’s Sephora store follows a similar format with Kohl’s Rewards points and Sephora’s Beauty Insider. Such offers will be attractive to consumers looking for promotions and freebies, but are also valuable to marketers by providing more first-party data and customer access, experts say.

“People are always looking for that right combination of convenience and efficiency with inspiration and freshness if you get that right mix of brands, you’ll be an absolute winner,” says Kaminkow.

Adrianne Pasquarelli writes for Crain’s sister publication, Ad Age.