Surviving the Recession
Shop In Shop

Beauty supply retail stores are getting bigger and bigger. But with such a large square footage, it’s not easy to fill every inch of it. To make matters worse, the recession slowed the hair industry, making attractive display and space utilization even more challenging. But if you fill some of your shelves with end of life products, it’s not going to make your store feel inviting. As a result, some retailers are now looking for ways to cope with recession with a shop-in-shop approach, that is, to utilize space and enhance competitiveness by placing small shops or stand-alone departments within the store. We’ll discuss the benefits of shop-in-shops, what to look out for, and hand-picked shop-in-shop ideas for beauty supplies.

 

Shop-in-shop is on the rise

A beauty supply in Georgia has been operating a shop-in-shop dress store for several years. The store has customers year-round, celebrating quinceañeras(15th birthdays), weddings and so on, but it is especially busy during homecoming and prom season with girls looking for uniquely designed dresses. A beauty supply store in Georgia has operated a K-pop store simultaneously for a while, which helped sales.

A beauty supply store in South Carolina had eyelashes, one of their top-selling items, placed in an enclosed area with only one side open in the front of the store. It is not hard to see that eyelash sales here are higher than other stores because customers can comfortably shop for the beauty essential as if they are in a shop specialized in eyelashes.

A retail store in New York City set up a dedicated K-beauty area in the front in response to the popularity of K-beauty. It carries made-in-Korea products such as skincare products, cushion foundation, lip makeups, and facial masks, and the business owner plans to increase the variety of products as the current offering has received positive feedback.

Some beauty supply stores even rent space out. There was a success story where a cell phone store, hardly relevant to beauty, was opened within a beauty supply, saving the rent for the cell phone store and bringing in new customers for the beauty supply.

 

 

A shop-in-shop is two stores under one roof, or in other words, a store with a part of space set aside to sell additional services or goods. Shop-in-shop is already being utilized by a wide range of businesses, mostly in big box stores, with notable success in beauty, fashion, and electronics. Well known examples include, cosmetics retailer Sephora inside a Kohl’s department store, electronics brand Apple inside electronics retailer Best buy, and the opening of small Starbucks stores inside discount department store Target (usually at the store entrance or next to the checkout counter) are all examples of how shop-in-shop collaborations can help brands build long-term growth.

 

 

For beauty supplies, the biggest benefit of shop-in-shop is the ability to expand your customer base. Due to the nature of the items you sell, you’re bound to have a limited pool of regular customers, but if you choose the right items for your shop-in-shop, you’ll have an opportunity to lure in new customers and promote your store. For customers, it’s a win-win situation because they can easily access a variety of brands or products in one place, and the shop-in-shop can turn the main store’s customers into their own. If you rent unused space in your store, it’s a win-win in terms of cost. The existing business can utilize the extra space and earn additional rental income, while the new tenant can reduce overhead costs including rent and initial setup.

Shop-in-shops are likely to become more diversified and specialized in the future as the economic downturn drives a focus on cost savings and synergies. Beauty supplies are well positioned to try out shop-in-shop as a recession-proofing idea.

 

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Shop-in-Shop Ideas for Beauty Supplies

The first thing that comes to mind for a beauty supply shop-in-shop should be a hair salon. Seeing firsthand the real-life application of your product can lead to a purchase, and it offers time savings and convenience to your customers. In addition to hair products, you can also increase sales by placing a variety of beauty items for makeovers, including cosmetics, jewelry, and more. Packages that bundle salon services with discounts on purchases are also a good strategy.

 

Tattoos are not a stranger to beauty supply as it is a way to express oneself and change the mood with a personal touch. You can offer free tattoo consultations or discounts to customers who come in to buy beauty products. You can also promote skincare products for irritated skin after tattooing. However, a strictly dedicated space for tattoo procedure is essential for hygiene and privacy.

 

Cell phone repair shops

Private cell phone repair shops are booming as cell phone devices and warranties have become more expensive. As a shop-in-shop, you can offer services such as LCD/battery replacement and software troubleshooting in a relatively small space, and customers can save time by getting their beauty products serviced while they’re shopping. Since customers will be spending more time in your store while their products are being repaired, it’s a good idea to place phone accessories in their path to encourage additional purchases.

 

Prepaid carrier services

Carriers that offer only prepaid plans are meeting the needs of diverse customer segments, such as adults with limited credit or seniors with low data usage, because they can easily sign up without a credit check or worrying about a contract. Some of the top prepaid carriers include Visible, Mint Mobile, Boost Mobile, and Tello, which offer affordable and convenience options. It’s also not demanding to operate, so you don’t need much staffing.

 

Eyebrow/Lash Salon

This is one of the services that is often associated with beauty supplies. With options like eyelash extensions, semi-permanent tattoos, eyebrow grooming, and false eyelash installation, customers can get an instant boost on their appearance. The price is relatively low compared to hair salons, so customers can easily access it, and it can be operated in a small space and sold in conjunction with products such as eyelashes and lash glues commonly sold in beauty supply stores.

 

Nail shop

With a qualified worker being hard to find and rent prices skyrocketing, more and more savvy owners are opening one-person shops or studios offering nail services by utilizing small spaces. Especially if you’re located within a beauty supply store, you’ll have a physical proximity to the nail products sold in the store, which can create synergies. The ability to communicate closely with customers and provide personalized service is also beneficial to beauty supply operations.

 

Fashion accessory shop

By creating a separate area for trendy accessories that many beauty supply stores already carry, you can give your customers an experience that goes beyond just shopping for beauty supplies.

Beauty supply stores can be perceived as a fun place with novelty items, which naturally drives traffic to your store, and small goodies like K-pop merchandise, popular character merchandise, fashion accessories are known for frequent impulse buys.

 

Ear piercing

While a piercing studio requires a sanitary and safe environment, a simple ear-piercing service can be easily operated in a small space and has the advantage of quick turnover. If you hire or collaborate with an ear-piercing technician, you can offer the convenience of buying earrings and getting your ears pierced at the same place, and you can also offer other accessories to keep your store vibrant.

 

Helium balloon services

Balloons for special occasions such as birthdays, baby showers, graduations, and parties are in constant demand. You can operate in a small space and customize your offerings with ideas like personalizing them with names or messages, or offering different themed balloon sets. It can be started with little upfront cost and is easy to operate without special skills.

 

Art gallery

You’d be surprised how many customers are looking for paintings for casual purposes, aside from those flashy, expensive pieces of art. Displaying artwork with cultural messages or paintings adorned with stones, beads, and other embellishments in a small art gallery-like setting can give your shop-in-shop a different feel than other parts of the store. Painting is a high-margin business, so catering to customers’ tastes can lead to both increased sales and public awareness.

 

Corrective Underwear and Lingerie Shop

Corrective underwear and stylish lingerie are popular for special occasions like weddings, parties, and graduations, but nowadays there are many options for everyday comfort. If you can offer a service that can recommend the best products based on the customer’s body type and style, you’ll get a lot of repeat customers.

 

 

Shop-in-shop, what to look out for?

Despite the many benefits of shop-in-shop, it’s not a case of “the more the merrier.” Aforementioned Sephora was first partnered with JC Penny. The two companies had a 14-year agreement, but when JC Penny was put up for sale in 2020, a legal battle ensued, and Sephora ended up forming a new partnership with Kohl’s in late 2020. There are a few things to keep in mind when running a shop-in-shop.

✓ Avoid combining products or services that don’t go well together.

For example, brand identities can clash when combining luxury and budget products or modern electronics and organic produce. Beauty products and tools doesn’t work either. If a beauty supply store displays a tool like a drill, it’s likely that loyal customers will hesitate to walk in.

✓ Check your license to handle food and beverages.

Most business licenses are governed by the city or county where the business is located. As the license is issued by different local municipalities, it offers various types of licenses that come with different restrictions. If your planned shop-in-shop stays within the same industry, this shouldn’t be a problem. For example, a beauty supply store could install a lipstick vending machine with no issue. However, in most cases, a new business that is not in the same industry as a shop-in-shop will require an additional license or amending the existing license to broaden the scope. 

✓ Shop-in-shops run by separate entities have a lot more to consider.

If the original renter subleases a space to another business, the contract should be clear about any issues that may arise between the two businesses. If you’re a tenant, make sure you know the remaining term of the primary lease or governing terms and conditions, and if you’re a principal renter, clearly define the terms of space use, revenue sharing, and operational responsibilities.

✓ Do the math.

It’s relatively easy for a business to run two shops in one store. However, before starting a business, you should carefully weigh the expected operating costs, such as staffing and investment, against the expected increase in sales from the new venture. Another consideration is whether both shops can maintain their own specialization without infringing on the business of another.

✓ Proper staff training is essential

As your services or products become more diverse, you need to provide extra training for your staff to assure good customer service and product knowledge. Even if you’re an employee of the shop-in-shop, you need to be able to represent and blend both stores seamlessly within the given environment. Otherwise, the combined atmosphere will not attract more customers.

 

The key is what kind of shop-in-shop it should be. “You can’t see your store until you’re outside the store,” says one beauty supply owner who has been trying new things for more than 30 years. If you expand your horizons beyond beauty supplies, there are tons of shop-in-shop ideas that can work well together with your existing items without clashing. We hope this new venture of two stores under one roof will revitalize the beauty supply industry.