Several Target store cards lined up within each other

eCommerce Trend Watch: Store Within a Store (SWAS)

Store-Within-a-Store collaborations are hotter than ever. Established brands and up-and-coming DTC merchants are taking full advantage. Here's why SWAS is a win-win-win.

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In reality, the store-within-a-store (SWAS) trend is nothing new. Department store beauty counters have exhibited the model for decades. High-fashion brands like Ralph Lauren, Louis Vuitton and Chanel have replicated the model by setting up shop in Bloomingdales, Macy’s and Nordstrom, respectively. Barnes and Noble is another long-time adopter of the trend, partnering with Starbucks to offer lattes and frappuccinos to perusing bookworms.

Yet the SWAS model has taken on new life in 2021. From Target and Apple to JCPenney and Sephora, big box behemoths are intermingling in a way that makes retail shopping more streamlined and accessible than ever before. 

This model sparks fresh customer interest in brick-and-mortar shopping — but the idea can be applied to DTC eCommerce stores, too. Here we will explore how the SWAS model works and how DTC in retail can benefit forward-thinking eCommerce brands.

What Is a SWAS?

Also known as a shop-in-shop or store-in-store, a store-within-a-store is a collaboration between two retailers, in which one retailer rents a section of another retail space to run their own, independent shop. This model differs from traditional retail operations because the guest retailer has total autonomy over inventory, pricing and in-store customer service, rather than selling inventory to the host retailer and granting them all decision-making power.

As with the tried-and-true beauty counter setup, the guest retailer’s corner of the store completely reflects their branding and image, as if transporting customers to their own brick-and-mortar store while they browse the SWAS. 

Benefits of SWAS

The SWAS model is advantageous to host retailers, guest retailers and consumers alike. Let us take a closer look at the benefits to each party involved:

Host Retailers

The hosting retailer earns revenue by renting out the SWAS space to the guest retailer. This gives them a guaranteed monthly payment, no matter how quickly or steadily the inventory sells. But the benefits of the model go well beyond monthly rent. The host retailer also gains new foot traffic by appealing to the guest brand’s loyal customer base. Many of these retail stores might not otherwise get access to this type of customer, as is the case with Apple x Target or Disney x Target SWASs.

In an era when many consumers turn to eCommerce and avoid brick-and-mortar stores, creating customer incentives to get inside the store is of paramount importance. One McKinsey study stated, “In the future, they (consumers) won’t visit stores unless retailers give them good reason to. Retailers must … envision a new role for their stores … and execute surgical changes to store formats and in-store customer experience.”

SWAS offers that novelty and allure to customers who otherwise would turn to other retailers and eCommerce stores to shop.

Guest Retailers (Manufacturers)

Manufacturers who adopt the SWAS model (the guest retailer), also enjoy an enormous range of benefits. Just as the host retailer gains access to new consumers, the manufacturer often gains access to a broadened customer base. Increased foot traffic means attracting curious shoppers and winning new loyal customers. And as the Target x Ulta Beauty collaboration shows, a SWAS offers immediate ROI. UIta’s stock jumped 16.8% after they announced the partnership in November 2020.
A Columbia marketing study revealed that the SWAS model also moderates inter-store competition, helping the guest retailer standout against similar brands. Guest retailers also gain decision-making power when it comes to inventory volume and pricing. And, because the arrangement exempts them from the standard in-store markup, guest retailers can offer more competitive pricing. All of these factors contribute to an increase in sales, which helps the guest retailer boost overall revenue.

Consumers

As one Fast Company article noted, the days of lazily strolling through store aisles are over (at least for now). The COVID-19 pandemic has altered consumer behavior, and consumers are looking for seamless shopping experiences that allow them to get in and out of the store quickly. 

Fortunately, the SWAS model allows them to do just that. Retail stores are even more of a one-stop shop — a place to find favorite, exclusive brands all in one place. Indeed, the SWAS model is akin to a modern, mall-like destination.

Consumers can also enjoy an elevated shopping experience with the SWAS model. They enter a luxury beauty store or enchanting toy store, all while picking up groceries and medications. Many stores-within-stores also offer an enhanced customer service experience. Brands like Ulta and Sephora providing expert beauty consultants within their segments at Target and JCPenney stores.

Applying the SWAS Model to DTC eCommerce

A screenshot of DTC company Dollar Shave Club razors on walmart.com

With the perks of the SWAS model, it is no surprise that a number of DTC eCommerce brands are capitalizing on the trend. Walmart, Nordstrom and other major retailers have kickstarted the DTC in retail store trend by partnering with Dollar Shave Club, Bonobos, Skims and more. 

Yet the latest SWAS model is taking a fresh turn, with DTC eCommerce brands collaborating with fellow DTC brands. The trend’s evolution makes sense in the COVID era as consumers shop from the comfort of the couch.

Tailored to eCommerce, the SWAS trend allows DTC brands to boost the success of new product launches, expand marketing opportunities, bring in new customers, and ease the stresses brought on by the pandemic (like supply chain disruptions).

DTC eCommerce Brand Collaborations

The opportunities for DTC eCommerce brand collaborations are endless. Many eCommerce retailers are collaborating with other DTC brands to sell co-branded products. Still others are adapting the original SWAS model and selling products on another DTC eCommerce company’s website.

Take, for example, Jinx, a dog food company that allowed customers to buy Spotlight Oral Care mouthwash and toothpaste on its website with the purchase of a dog dental chew toy. Jinx marketed the collaboration as an oral care package for dogs and their owners, expanding brand awareness across both companies.

Gravity is another brand leveraging DTC collaborations. The weighted blanket company has partnered with Purple mattresses, Objective wellness brand and others to create co-branded blankets. And the marketing tactic has certainly paid off: The brand credits such collaborations with bringing in almost 20% of their total revenue.

Collaborate with Ease with Scalefast

Scalefast makes it easier than ever for DTC eCommerce brands to collaborate with other DTC brands. From product drops to liquidation, our specialized web stores offer a streamlined solution built for high-volume and high-performance. Talk to an eCommerce expert today to learn how we can help facilitate the SWAS model for eCommerce.

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