Store Within a Store

In a store-within-a-store arrangement, retailers essentially rent out retail space to manufacturers and give them complete autonomy over retail decisions, such as pricing and in-store service. This intriguing retailing format appears in an increasing number of large department stores worldwide. The...

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Bibliographic Details
Published inJournal of marketing research Vol. 47; no. 4; pp. 748 - 763
Main Authors JERATH, KINSHUK, ZHANG, Z. JOHN
Format Journal Article
LanguageEnglish
Published Chicago American Marketing Association 01.08.2010
SAGE PUBLICATIONS, INC
Subjects
Boutiques
Brands
Competition
Department stores
Distribution channels
Economic competition
Marketing
Merchandising
Retail prices
Retail stores
Studies
Traffic
Wholesale prices
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Summary:In a store-within-a-store arrangement, retailers essentially rent out retail space to manufacturers and give them complete autonomy over retail decisions, such as pricing and in-store service. This intriguing retailing format appears in an increasing number of large department stores worldwide. The authors use a theoretical model to investigate the economic incentives a retailer faces when deciding on this arrangement. The retailer's trade-off is between channel efficiency and interbrand competition, moderated by returns to in-store service and increased store traffic. The retailer cannot credibly commit to the retail prices and service levels that the manufacturers effect in an integrated channel, so it decides instead to allow them to set up stores within its store. Thus, the stores-within-a-store phenomenon emerges when a powerful retailer, ironically, gives manufacturers autonomy in its retail space. An extension of the model to the case of competing retailers shows that the store-within-a-store arrangement can moderate interstore competition.
ISSN:0022-2437
1547-7193
DOI:10.1509/jmkr.47.4.748