The marketing ROI behind Ulta in Target and other shop-in-shops

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Behind the brand

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 it wishes. But some deals go further and include revenue sharing deals such as the small store paying its host a percentage of sales. Marketing agreements, including the brand identity for the small store, are also included in the contract stage. This is the case with many retail partnerships in China, which successfully launched the concept, according to Kahn.

At Target, each shop-in-shop is unique compared to the others, according to a spokesperson, who notes a “collaborative approach with each of them in terms of branding and marketing”. Ulta mini stores are staffed with 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 match, including Ultra Beauty’s unique orange awnings and bold, vivid graphics beautifully woven into the existing Target store,” Haus said, noting that , as on the design of the store, the Ulta and the target teams work “in parallel” on the marketing. These efforts include co-produced ad and social content, influencer engagement, and a TikTok challenge.

Kohl’s effort for Sephora is similar. Retailers have collaborated on pop-up activations, sweepstakes, influencer campaigns and prioritizing messages from Sephora at Kohl across all channels, according to Greg Revelle, chief marketing officer at Kohl’s.

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

In an age when all marketers are looking to strengthen relationships with consumers, the in-store concept gives brands more control over the customer experience than they would have if they were just stocking products. on the shelves. The brand within the larger brand has the advantage of controlling its own logistics and branding.

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

Use all media

Also, since most retailers now have their own media networks, it’s easier to market new stores on existing channels such as newsletters, email notifications and websites, according to Kaminkow. .

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

Of course, retailers also need to do their homework. A marketer like Sephora or Ulta would want to make sure that a new shop-in-shop isn’t too close to an existing stand-alone store, which could risk cannibalizing sales. Additionally, brands need to share consumer data in their relationship so the mini-store knows what products to stock for certain geographies and communities, experts say. Inventory is smaller and better organized, so brands need to make sure they don’t waste valuable shelf space on the wrong items.

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

“People are always looking for the right combination of convenience and efficiency with inspiration and freshness if you get the right mix of brands you will absolutely win,” says Kaminkow.

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