When Ulta Beauty opened its small-format shops within 100 Target locations last month, many shoppers voiced their approval. Social media commenters applauded the move, many calling it the “best thing” or “dangerous” for bank accounts. But Twitter user Ogbenyealu’s analysis was perhaps the most telling: “Yesterday I went into a Target that had the new Ulta concept store in it. Today I see that Disney is closing its standalone stores and opening smaller boutiques inside Target. So basically [Target] is about to become a whole ass mall. Like we didn’t spend enough money there already.”
The modern mall is here. New shop-in-shops concepts, including Target’s Ulta and Disney spaces and a recent partnership bringing Sephora into Kohl’s, are creating an updated twist on an old retail concept. In the past, such mini shops were more similar to a department store, with one larger brand offering a curated assortment of a smaller label. Now, large retailers are recognizing potential shopper synergies and banding together in a mutually beneficial partnership. Many, like Ulta and Target, work together on marketing and visuals that remain true to each retailer’s individual branding.
“Historically I think companies were wary of promoting their competitors, but we’re in an era of trying new things, reinventing business models and not being as threatened by change, especially when a similar concept has already happened with no adverse consequences,” says Sucharita Kodali, VP and principal analyst at Forrester, citing the multi-year success of Sephora within former retail partner JC Penney.
That era of trying new things extends to Macy’s, the 163-year-old heritage department store. The company recently announced plans to bring small Toys R Us shops into 400 of its stores beginning next year. Target’s Disney shops, which debuted in 2019, will triple in count to 160 by the end of this year—a move that comes as Disney shuts down standalone stores in high-profile locations such as along Chicago's Magnificent Mile. Kohl’s introduced Sephora to shoppers at 70 of its 1,160 locations in August, with the eventual goal of hosting 850 sites; similarly, Target plans to extend its Ulta store count beyond the 100 initial locations to 800.
“Feedback continues to be overwhelmingly positive,” says Shelley Haus, chief marketing officer at Bolingbrook, Illinois-based Ulta, about the first two weeks of the partnership.