Joanne McNeish is a professor at the Ted Rogers School of Management at Toronto Metropolitan University

Public opinion and retail consultants have been predicting the decline of brick-and-mortar retail for decades.

Such forecasts have become more explosive in recent years, as COVID temporarily closed most brick-and-mortar retail stores and the associated financial consequences forced some stores to close permanently.

Yet Statistics Canada’s latest annual retail survey shows that 89 percent of retail sales are still made in physical stores.

One innovation that has helped brick-and-mortar retail remain relevant is the “store within a store.” I expect more and more large-scale retailers will use this strategy to increase sales and control costs.

This is not a new phenomenon. The first players in the store-within-a-store space were perfume and fashion designers. Canada Post also entered this space by partnering with drugstores to set up post offices in their stores.

Depending on how you define a store, the Service Ontario offices integrated into Canadian Tire are another example.

And the concept of stores within stores has become increasingly popular lately.

Examples include department stores like The Bay partnering with Mountain Equipment Company, and major retailers like Toys “R” Us working with Rooms+Spaces.

In the US, companies such as Target, Macy’s and Walmart have adopted the concept.

In 2022, Target more than tripled the number of its own Apple stores. In the same year, Walmart counted more than 360 stores of fashion retailer Claire’s in its stores.

The store-within-a-store is one possibility for retailers with large sales areas to increase sales per square meter and offer customers complementary products in an unexpected and convenient way.

Part of the increase is due to the weak retail landscape. Recent cost management measures have left large-scale retail stores with a lot of unused space. It’s a smart way to use the space in the remaining locations to open pop-up stores (short-term partnerships) and stores within the store (longer-term partnerships).

However, the difference between presenting multiple brands in one store and a shop-in-a-shop may not be immediately apparent to consumers. A shop-in-a-shop creates a separate retail unit that operates within the main store. This means that the revival of the Zeller’s brand by its owner Hudson’s Bay, for example, is not a deal within a deal.

In a shop-in-shop arrangement, the retailer charges rent for the occupied space to increase overall sales. The partner retail brand using the space decides the products and prices offered; employees work for and are trained by the retail brand and do not sell or have any knowledge of the host store’s products and services.

The store-in-store concept is a win-win situation for both partners, as long as the two brands complement each other.

What do complementary brands look like? They have a similar customer profile and the quality of the products and services meets the needs of both customer groups.

The success of this format depends on the brand match between the two retailers. In most cases, the host retailer is at greater risk of damaging its brand image, so careful consideration should be given to selecting a partner brand with an equivalent brand image.

Having multiple brands in retail increases footfall. Customers search for a specific product and may discover the partner brand in the same space. The competitive but complementary offering can be beneficial for both retail brands

If implemented correctly, the store-within-a-store concept is a lucrative way for retailers to respond to changing consumer habits in times of high inflation and competition from numerous old and new retailers.