The Connection between Enhanced-Category Departments and Stores-Within-A-Store
An enhanced-category department in Whole Foods, Altamonte Springs, FL
As most people in the retail industry know, a store-within-a-store is an agreement a retailer makes to lease a part of its floor space to another company. The lessee then runs an independent store or sells its products out of a distinctly designed area. Studies by the Wharton School found that both parties usually benefit from this arrangement. The retailer makes money by renting space and doing without the headaches of a labor intensive operation, the renting company benefits from the additional foot traffic and the captive audience attracted by the retailer. Both parties make a higher profit than they would through a standard wholesale model. Ultimately, though, it's the consumer who wins with lower prices and better service.
Some of the more common examples of this smart business practice are a Starbuck's inside a Barnes and Noble or a Dunkin' Donuts inside a BJ's or a Target.
But there is also a slightly different business model. Variations on stores-within-a-store have become very popular in supermarkets and with retailers such as Staples and Office Depot.
Although both models are examples of a manufacturer involved with an outlet within a retail company, there is an essential difference. Starbucks and Dunkin' Donuts run their own businesses with their own cash registers and employees. But think of a Ralph Lauren inside a Bloomingdale's or Madison Home Linens in a ShopRite. This latter variation is referred to at Off The Wall as either a "highlighted brand" or "enhanced category" department.
This millwork designed, fabricated, and installed by Off The Wall for Target optical departments partnered with Luxottica are an example of a store-within-a-store.
In the highlighted-brand model the manufacturer simply rents or pays for part of the shelf space with its own signage and distinctive decor but uses the retailer's personnel for re-stocking and and cash registers to handle sales.
Madison Home Linens. Illuminated shelving unit fabricated and installed by Off The Wall for various Shoprites in New Jersey
An "Enhanced category" is a section of the store selling products of a similar type that do not have a single or a well-known brand name but that benefit from the public's perception of a store-within-a-store or highlighted brand section that offers high quality brands at reasonable prices.
Enhanced categories precede both stores-within-a store and departments with highlighted brands by decades, but they have been cropping up with a renewed vigor and increasing sales in more and more retail outlets over the past few years.
A good example of this is in the photo seen below. The Kitchen Shop departments fabricated and installed by Off The Wall are rolling out in various Wakefern Shoprites all around the New Jersey area. Our clients report greatly improved sales with products that their customers don't necessarily think of right away when shopping for food.
The enhanced category business model is really an enhanced POP signage model resulting in an enhanced profit margin for the growing number of retailers using it.
Off The Wall Company, LLC has designed, fabricated, and installed innovative retail solutions for clients all over the country for over forty years.