What is a Store Within A Store (SWAS)? ToysRUs’ Comeback
Once an iconic children’s store where birthday dreams and Christmas magic came to life, ToysRUs‘ sixty-nine-year legacy came to a swift end when the company filed Chapter 11 bankruptcy in 2017.
Priced out by cheaper online retailers like Amazon, the brick-and-mortar retailer quickly folded, shutting all of its stores globally by early 2021.
They’ve since made a comeback, using a version of a pop-up shop within Macy’s. Macy’s is a popular department store, using a ‘Store within a Store’ (SWAS) model to give ToysRUs a physical store presence once again.
Let’s look at why ToysRUs opted for a SWAS revival, using smaller pop-ups within a larger department chain over standalone stores.
The Rise of E-Commerce
ToysRUs’ failure is largely the result of them failing to adapt to a changing retail landscape. They missed the ball on becoming an online retailer, and were quickly outpriced by convenient online-only competitors.
Amazon especially was a huge nail in their coffin – ToysRUs filed for bankruptcy in 2017 and 2018 after Amazon’s popularity exploded.
What is a SWAS Set-Up
A Store Within a Store or SWAS, is usually when a business places their store in a larger business with full branding, products, and layout to create the illusion of a storefront within another larger store. Unlike a pop up shop, they tend to stay in the space permanently.
So how is a SWAS model beneficial? Well, the major pro is cost efficiency.
Running a physical store in today’s retail landscape is incredibly expensive – maintaining inventory, rent, and employee salaries are just a few of the factors that make up overhead costs.
By partnering with Macy’s, ToysRUs can save on some of these costs while still having an actual storefront. Although it’s a lot less smaller and doesn’t have the same, spellbinding feeling of rows upon rows of toys stacked floor to ceiling, this set-up still serves as a way to draw in customers.
Macy’s can use ToysRUs’ brand name to attract parents and children, and the smaller size stores can make some things easier for them to maintain.
They’re not the first corporate partnership that takes advantage of SWAS. Target’s got Starbucks, Apple, and now Ulta stores tucked within their larger store locations.
Target makes money by charging them rent for the space while allowing these businesses to pick up new or more repeat customers from foot-traffic.
How it Works
In a successful SWAS partnership, both brands win. The smaller company can get its name out there by partnering with a larger retailer.
Customers can enjoy the convenience of shopping multiple products and brands in one store, and the larger retailer can charge rent for the space and other costs.
But it’s not a guarantee that SWAS will work for all companies. Target’s partnership with Neiman Marcus crashed and burned in 2012, leaving both companies with huge losses. In rare cases, some larger brands can hurt the smaller companies by overshadowing them or taking over their brand identity.
ToysRUs Comeback is a little different due to who they choose to partner with. Macy’s average customers having children and/or grandchildren can be a great advantage for ToyRUs. Making sure the partnership aligns with the target customers is important.
How To Maximize Your SWAS
Data is becoming increasingly easy to access, and an effective tool. Data is what the leading SWAS brands are using to maximize their performance.
We can understand the importance of this data through Kohl’s CEO, who shared their insights on the matter. They spoke about how upgrading their data science system and utilizing data to enhance store layouts was crucial to their success. Kohl’s has partnered with Sephora with SWAS model, further showing how this kind of collaboration can work for major brands.
The store layout plays a pivotal role in the brick-and-mortar setting. Ever walked into a place and felt disoriented? A poor layout, or one that is constantly changing can be overwhelming and deter you from making purchases.
Sephora is the perfect example of a SWAS provider that excels in layout design, especially their waiting lines. Similarly, Ulta’s separation of high-end and drugstore brands aids customer navigation and boosts sales.
Utilizing a data-driven approach to maximize growth is the key to effective SWAS operations. Both scenarios enable easy product discovery, which is the key, especially in a compact SWAS store. We recently did a case study on marketing your business, and this also plays a part in maximizing your SWAS, you have to think outside the box.
Another critical aspect to SWAS stores is the hierarchy of product placement. Due to the limited space, making sure top-sellers and products shown perform well in the area are properly stocked. To do this effectively we can again utilize data like demographics, locations, and interests of customers which all substantially influence buying trends and growth.
Looking to the Future
As businesses like Amazon continue to dominate the online retail space, they’re looking to expand into brick-and-mortar stores. If successful, this could have a major impact on the future of SWAS partnerships and traditional brick-and-mortar retailers.
SWAS partnerships may be a viable option for smaller brands looking to gain exposure and reach new customers. But also for larger brands looking to cut cost while still maintaining a physical presence.
In the wake of mass brick-and-mortar store closures, it’s increasingly important for retailers to diversify their strategies and find new ways to attract customers. SWAS partnerships offer a unique opportunity for both brands to benefit from each other’s strengths and reach a wider audience.
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