When stores shuttered in March 2020, online shopping saved us. We went into survival mode, and that accelerated ecommerce buying by nearly a decade. And while the rapid shift in buying for crucial items and stuff to cozy up with at home for both brands and customers was something of a “new normal,” it lacked the personality and tactile experience of being in a store. Our ability to select new items was restricted to what we could put in a digital cart. This left many craving a return to this errand, retail normalcy in their everyday lives.

Even the most seamlessly designed app or online shopping experience is fundamentally different to the tangible experience of “retail therapy.” Partway through the pandemic, armed with masks, knowledge about physical distancing, vaccines, and more, people began returning to retail businesses, first a little, and then a lot. Retail sales dropped in 2020 by 2.9% because of the pandemic but have since steadily risen with a projected $27 trillion in revenue for 2022. And, according to Adentro, July 2021 saw month-over-month growth in customer foot traffic to physical stores of 43%, and that number consistently stayed above 28% for the remainder of the year.

The option of an in-person shopping experience instead of just online is now a crucial, valued attribute for many shoppers who didn’t realize how much they’d missed it. It can also be a more effective way for brands to sell, because while online carts can be easily forgotten, physical ones are much harder to ignore: customers are likely to convert and return if brands excel with in-person service and experiences.

Small business owners and direct-to-consumer (DTC) brands that exist solely online and want to capitalize on this paradigm shift might find themselves dreaming of new alternatives or directions for their business. Some may even be dreaming about opening their own retail space. With that comes an anxiety-inducing dose of reality that opening a retail store is daunting, complicated, and likely very expensive. From finding the right spot, paying increasingly high rents, decorating and merchandising, and hiring staff, “going brick-and-mortar” is a consuming and costly endeavor with serious time and financial commitments—and a fair share of risk.

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Another approach to selling and buying is shop-in-shops. With shop-in-shops, brands can rent square footage in a larger store’s brick and mortar space, and become an attractive alternative to both traditional retail and ecommerce efforts. Shop-in-shops, also known as pop-in shops, are not a new idea, with examples of cellular brands inhabiting space in big-box stores over the past three decades, and major fashion and apparel brands taking up square footage in familiar department stores. Today, a brand, usually a digitally native direct-to-consumer brand, tries retail on for size by renting out a portion of a larger retailer’s brick and mortar store.

There are many examples of successful shop-in-shops big and small, but some heavy hitters are helping to turn the trend into a bonafide, lasting option. Last year, Target announced it would open “mini Apple stores” in 10 locations, complete with an experiential focus and specially trained staff. This comes following the announcement of Ulta Beauty setting up shop-in-shops in over 100 Target stores. Keeping with the beauty trend, Kohl’s is going to be playing host to 850 Sephora shop-in-shops, a move that should be executed by 2023.

Like Tupperware parties without the pressure or a babushka doll for grownups, shop-in-shops offer surprise and delight, and combine the best of the retail and DTC worlds.

The resurgence of retail wasn’t a matter of if but when. Even amid news reports of economic troubles, more sickness in the winter, and so on, buying in-person is something shoppers missed. By providing foot traffic, revenue, and an experience for buyers, shop-in-shops become an advantageous path to help online exclusive brands test and possibly expand into the retail market more effectively than more traditional retail routes that came before it. Retail won’t overpower the online buying world or vice versa. Instead, they can and will live in harmony in new, interesting ways in the years to come.

Here, we’ll explore the evolution of shop-in-shops and brick-and-mortar retail, the advantages of shop-in-shops for both big name retailers and DTC online brands now and in the future, and, finally, how this translates to consumer trust.

In the beginning, there were pop-up shops

Although shop-in-shops are part of the retail and DTC lexicon, it would be remiss to leave pop-ups out of the conversation, if only because they share many similarities. For nearly two decades, pop-up stores were the answer for brands that wanted to dip their toes in the retail waters. Mainstays at food and culture festivals large and small, as well as at gallery openings and special events, pop-ups always offer customers a limited timeframe and experience with a brand that builds both hype and affinity. Even though they’ve become familiar to consumers by now, the novelty of the pop-up has not worn off. Not only do they offer the opportunity to “make a second first impression” with existing customers, this time in person, but they can also tell a brand story that builds anticipation, entices people to show up and shop, and helps create lasting intrigue.

Pop-up shops that turn retail into an immersive brand experience can linger in the minds of customers for years to come. Standouts of the form include 2019’s Depop Live, a two-day pop-up in New York that featured workshops, panels, and performances by fashion-industry creatives. Another win is the Hello Kitty Cafe, themed food trucks that bring joy to kids and adults alike by serving sweet treats alongside Hello Kitty merch. Speaking of merch, musicians can bring theirs directly to fans via pop-ups, like Kendrick Lamar did on his DAMN. tour in 2017, offering limited edition merch and even showing up at some of them much to the delight of his fans.

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The natural evolution of the pop-up shop is the shop-in-shop. Shop-in-shops differ from pop-up shops because they are within the walls of existing, bigger stores. Planned examples of these include department store chain Nordstrom, which is set to open 40 shop-in-shops spaces selling high-tech fitness mirrors made by Tonal, and Lids, a sports apparel retailer in Canada that will welcome 45 shop-in-shops featuring DSW and The Shoe Company products.

Why shop-in-shops are beneficial for DTC brands and enterprise retailers

While the many brands who pursue the shop-in-shops model operate separately from the retail space they are in, they also reap the benefits of the higher foot traffic and built-in customer base the bigger stores come with. Shop-in-shops are a win for big brand name retailers and DTC-first online companies alike: this partnership can entice customers with an element of the unexpected while bolstering the appeal of both brands.

Affordability is a massive advantage to the shop-in-shops model. The pandemic resulted in a surplus of available retail spaces followed by commercial rent decreases. The US, UK, and France all saw 125% increases in available retail space listed between June to August 2020, according to research by Appear Here. Even though things have picked up since then, the current moment remains a prime time for brands to explore the benefits of having a physical space within well-known retailers.

These setups prove hugely beneficial to retail owners who can leverage their square footage while providing a relatively safe way for DTC businesses to access new customers in a hands-on way.

Shipping and delivery is costly, and oftentimes buyers are asked to absorb those costs. Combined with the expectation of free shipping that many DTC consumers look for, these high costs risk a reduction in profitability and lead to abandoned online shopping carts. Buying highly buzzworthy DTC products in places shoppers already exist, like department stores or familiar retailers, can only help in the bid for more brand awareness and revenue.

Shop-in-shops, while an enticing way to bring in new customers to a new brand, draw on one of the most powerful marketing tactics of modern-times: nostalgia. An example of this is legendary Canadian retailer Hudson's Bay Co. announcing their plans to bring back the country’s much-beloved Zellers brand as a shop-in-shop to be housed in some of their department stores. Along with this, they’ll also have a dedicated Zellers ecommerce site, bringing the old into the new digital world. In addition to Zellers, The Bay is welcoming Mountain Equipment Co-op, another Canadian classic, as a shop-in-shop in select stores, too.

Not only does this draw on the memories shoppers may have of these retailers, but it also helps all three brands by calling upon the collective force of convenience, reminding people why they loved these brands in the first place—becoming a physical place where brands associated with pride for one’s country can exist together peacefully.

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Retailers will benefit from bringing on digitally native brands or resurrecting ones we thought long gone. Customer demographic will widen, and perhaps—in the case of hyped, specific brands brought into physical spaces—create a feeling of community. The biggest advantage for retailers, though, might be that smaller shops renting space in their store come with their own marketing and merchandise, taking pressure off of retailers to be constantly updating their store with new products or plans.

They also offer each other a bit of insurance: both for DTC online brands and enterprise retailers. As we saw in the pandemic, outside forces can sometimes make one-stop shopping a necessity, so visiting one large store and still getting boutique experiences within it gives customers the best of both worlds.

Shops-in shops add a real treasure hunting element to the big-retailer shopping experience that usually doesn’t exist on its own. Like an Easter egg for consumers, these shops can give shoppers a rush of excitement that makes the experience especially satisfying.

Why shop-in-shops is the future of retail and ecommerce

The lessons the pandemic bestowed upon us were many, but one that stood out was that without the ability to leave our homes, we are at the mercy of the internet to meet even our basic needs. Retailers learned they need to have a strong ecommerce platform to succeed, and that won’t change. With shop-in-shops, online brands and big box chains alike now have a new pathway to bridge the digital and physical experience, changing how buyers think and buy the products they want. Digitally native brands can get up close to their customers in a way that simply wasn’t accessible to them before. The partnerships these arrangements offer give brands access to a larger customer base without the pressure of needing a physical location to house their stock.

Shop-in-shops reduce risk for buyers and brands. For DTC brands, shop-in-shops are a much more affordable option than renting out space for a stand alone store, and this path has cost-saving measures by reducing the rent of their host store. Smaller brands can expand more quickly than they would if they were opting for full brick and mortar businesses, by opening shop-in shops in multiple retail locations. This can help to diversify their reach and become familiar to different customer bases. This is a great way to test certain locations for their retail potential, especially if permanent brick-and-mortar stores are a future consideration.

The future of buying revolves around a key pillar of flexibility. How nimble will a brand be both online and in-person? That will help determine if a customer is going to stick around. Shop-in-shops position brands so they adapt to consumer demands and trends due to the relative flexibility of the arrangement. They are also a step in the multichannel, or “click and mortar,” retail direction where customers get to choose whether they shop online or in-person.

Because retail shopping offers customers a holistic shopping experience, running a shop-in-shop can give retailers the ability to bring their brand narrative to life and create memorable shopping experiences for customers. According to a study by Forrester Consulting, conducted on behalf of Shopify, more than a third of consumers (35%) have plans to engage with brands via experiential moments. One way to create experiential shopping moments is by taking advantage of seasonality. Businesses offering seasonal fare can maximize marketing and selling efforts during the time of year that makes the most sense for their goods with a shop-in-shops.

The idea that DTC business is incompatible with retail is the product of equating the convenience of online shopping with the “burden” of in-person shopping. Aside from the fact that the pandemic turned in-person shopping from inconvenient into an act of freedom and fancy, putting them together doesn’t make one work less effectively. The two shopping styles exist in harmony more than we’ve previously given them credit for: they are meant to give consumers different shopping experiences.

Shop-in-shops give consumers something crucial: options. Buyers love to pick a lane that fits their lifestyle. Discovering new brands within a trusted large store—and leaving with the knowledge that a brand's products, and a store, are available online— is exciting, convenient and happy-making all at once. Knowing that two brands you like also like each other simply increases the good shopping vibes, and everyone benefits.

The momentum retail gained will stay apace in 2023, but not without a few challenges for brick and mortar stores. There is still a chance of further economic slowdowns in 2023. All of this is made more difficult by the fact that the past three years have been full of change and unprecedented loss and grief that is still very difficult to unpack.

Forewarned is forearmed. Retailers that have adapted and survived the last three years have learned countless lessons about how to navigate changing circumstances. Online brands thrived in an ecommerce world but now the winds are shifting again. Remaining agile and fast is crucial for brands and brick-and-mortars alike. This is where shop-in-shops is the advantage, and the future.

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Shop-in-shops combine the best of the retail and DTC worlds.

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Back in March 2020, when the very first lockdown was announced in my city, I went to the grocery store with my then-one-year-old daughter for provisions. No one was wearing a mask because no one knew to wear them yet. While I stood in a very long line holding diapers and antibacterial wipes, a wild-eyed woman with a cart full of toilet paper rolls and enough laundry detergent to clean a soccer team’s clothes for a year frantically cut in front of me. It was tense, and it’s weird to recall. Memories of the earliest pandemic days are easily forgotten after 20 months of mask mandates, lockdowns, millions of deaths, vaccines, and multiple strains of COVID-19, but they are also when our collective anxiety first spiked.

With the initial lockdown, independent business owners with storefronts faced closures and hard choices they were largely unprepared for. Those with ecommerce stores already set up were slightly better prepared, but they still had supply-chain, inventory, safety, and staff concerns keeping them up at night. “It was challenge after challenge,” says Alyssa Kerbel, owner of mini mioche, a Toronto-based clothing store for children.

“Running a business and being an entrepreneur already makes you feel like you're treading water, and when the pandemic hit, it was like someone constantly pushing your head down, and you have to keep fighting harder to stay afloat.”

Early on, there was a sense we were facing a global event that might immobilize the supply chain and cause widespread food and goods shortages. That didn’t happen to the scale we had feared, but the frenzy it caused, combined with job loss, business closures, and the fear of catching a deadly virus, spun many into anxiety spirals that were only temporarily quelled by governments deploying safety nets to maintain some kind of economic order. Not only did living in a perpetual state of worry, largely at the mercy of an invisible illness and the safety-minded rules different governments implemented, make independent business owners stressed, it also shook their mental foundations. During the pandemic, career coach and Careergasm founder Sarah Vermunt urged her clients to release any shame they might have around experiencing mental health struggles because “these days it's the norm, not the exception.”

Vermunt is correct. According to Bupa Global’s Executive WellBeing Index, 78 percent of business leaders have experienced poor mental health throughout the pandemic. Research compiled by Statista at the end of 2020 showed that 4 in 10 U.S. adults developed symptoms of anxiety or depression. This is not to say that people were prioritizing their mental health prior to the pandemic; in fact, the mental health of business owners was decidedly not great in the year leading up to it. A 2019 Canadian Mental Health Association study found that 62 percent of business owners felt depressed at least once a week. Female-identifying entrepreneurs that had newer enterprises, less revenue, and/or fewer employees, were more likely to report mental health issues, and nearly half of them said mental health interfered with their ability to work.

Vermunt witnessed firsthand the impact the pandemic had on the independent business owners she works with. “I have many clients who've had to take sick leave,” she says. “Their mental health got so bad that their bodies started shutting down and they had to stop working.”

Pandemic pivots

For Ben Amanna, owner of boxing apparel company Boxraw, the initial scramble to figure out how to operate remotely was stressful and sleep-deprived, but ultimately productive. “When [the lockdown] first got announced it was a Friday and we stayed in the office until maybe four or five in the morning just trying to strategize how to approach the next however many months,” he says. “One campaign we ideated was called One Way Forward, which is about how people need to push through, rather than just dwelling on what they can't control right now.”

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Having pandemic lockdowns produce a forced sort of “live in the moment” style of business is the sunniest way to look at the endless obstacles of the first few months. A survey by the Canadian Federation of Independent Business (CFIB) found that almost half of all small business owners surveyed suffered from mental health issues because of the pandemic, and they pointed to working significantly longer hours, mostly to launch, plan and maintain ecommerce sites.

Aaron Spivak, whose weighted blankets company Hush Blankets began booming early in the pandemic thanks to people being at home and seeking comfort, was spared the worry of losing business, but he wasn’t spared the stress. “It was good because we saw an increase in sales,” he says. “But it was bad because we weren't prepared for it.” Keeping up with demand proved near impossible. “It was hard from a supply chain standpoint because we sold out and it became increasingly difficult to get products because everybody else was sold out too.”

Kerbel, whose soft, locally made, eco-conscious clothing for children was in demand once people started working and schooling from home, faced similar challenges to Spivak, with the added stress of having to make some hard decisions about products and what to do about the company’s brick and mortar stores. “At first, we changed the whole retail model for our Queen Street West store to a showroom concept, and initially re-opened the Distillery District store as an outlet location,” she says of her Toronto stores. “We decided not to continue selling products that were not under the mini mioche house brand, and then we made the decision to permanently close our Distillery District and Los Angeles stores. That was about simplifying.\"

Keeping things simple was what many business owners were striving for once their previously office-based workplaces moved entirely online. “All of the feedback loops, which worked before due to face-to-face interaction, were suddenly gone,” says Boxraw’s Amanna of his overnight remote office setup. “We recognized the need for proper reporting lines, so we use a messaging service called Telegram now.” Going fully remote also forced him to reassess his own role, redefine what his objectives were, and ultimately made him realize that he needed more help. “We went into the pandemic with 16 employees and we left the first lockdown with 32,” he says. “I realized I was a huge bottleneck in the company. It's hard to let go, but it was a necessity.” Proper onboarding, regular check-ins, and guidelines for staff to follow helped Amanna extract himself from being involved in every aspect of the decision-making process.

Similarly for Kerbel, the pandemic pushed her to make changes she’d long been contemplating. “I think the pandemic was partly an opportunity to reevaluate our business as a whole, to decide what makes sense and what's maybe not making sense,” she says. “And it was an opportunity to make those changes because everything was changing.” She also recognizes the incredible gift of her brand being in demand at a time of such massive economic instability. “We were in a fortunate position that a lot of our customers continued to support us and really just moved their purchasing to our ecomm,” she says. “Our product is very comfy and conducive to being at home all the time.”

But it wasn’t just the comfort of the clothes that drew customers to their site. In the first months of the pandemic, people were forced to confront their buying habits, and the urge to buy and support local, environmentally-friendly businesses was strong. “The pandemic helped people to be more mindful about the types of businesses they’re supporting, and the values of those businesses,” Kerbel says. “Our clothes are locally made [in Toronto], with sustainable materials and we have a lot of gender-neutral clothing.”

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Understanding the widening gap of who can prioritize mental health care

People weren’t only shopping more mindfully—with multiple lockdowns, our once full lives became decidedly more inward-facing. Without the distraction of busy lives in the way, the injustices around us became harder to ignore. The murder of George Floyd by police officers in June 2020 ignited a movement that goes beyond honoring and preserving the sanctity of Black lives. It also gave us the opportunity to examine the myriad of systemic ways Black, Indigenous, racialized, and other marginalized groups are left out and oppressed. It is of little surprise that the pandemic has disproportionately impacted the people that were already marginalized. According to the National Bureau of Economic Research, the pandemic caused temporary or permanent closures of minority-owned firms in the U.S. at higher rates than nonminority firms. It estimates that between February and April of 2020, the number of actively working, self-employed Black business owners decreased by 41 percent, the largest change of any racial group included in the study. Latinx and Asian workers experienced declines of 32 percent and 26 percent, respectively, but self-employed white workers only saw a 17 percent drop.

Not only did these groups lose more business, but their chances of recovery are also grimmer. A 2016 survey on racial trends and access to capital by the Kauffman Foundation found that racialized people often have more difficulty getting startup funding, with over 70 percent of new Black, Hispanic, and Asian owned-businesses needing to rely on personal funds and family savings as startup capital. White entrepreneurs face no such barriers and are the most likely of any race to secure a business loan from a bank.

Worldwide, the pandemic has led to millions of job losses with low-income families hardest hit. Since it started, 46 percent of low-income adults in the U.S. have struggled to pay their bills, and 32 percent have had a hard time making rent or mortgage payments. Researchers made a connection between employment status and mental and physical health, and they found that depression and anxiety are three times as likely in those with low incomes. They also noted that joblessness affects mental health most extremely in countries with gross income inequality and weak unemployment protection. Gender inequalities have also worsened, and according to the UN, COVID-19 continues to widen the gender poverty gap worldwide and is expected to push approximately 47 million more women and girls into poverty, bringing the total number to 435 million.

While these figures might make the mental struggles of those from whom the pandemic proved good for business seem trite, they also highlight an important point: many who run successful independent businesses have the means to focus on their mental health. For those struggling to bring in revenue, mental health is simply not a priority because it can’t be.

Government subsidies helped those who lost income, or their jobs, or otherwise couldn’t work during the pandemic, but not everyone was eligible. What’s more, even if they were, being able, or barely able, to pay one’s bills, while helpful, does not equate to good mental health. Interestingly, Canada, the U.S., and the UK all have their own government-funded mental health portals. Canada’s Wellness Together, created in response to “an unprecedented rise in mental health and substance use concerns due to the COVID-19 pandemic,” acts as a resource for those going through acute mental health problems, and mainly those who need crisis counseling. It also offers online courses and progress trackers. In the States, Mental Health.Gov and the National Institute for Mental Health offer similar resources and crisis counseling. Mental Health UK takes the most holistic approach, combining information, peer and individual support, and financial advice. Counseling is covered by the NHS in the UK, but Canada and the U.S. both lack covered access to regular counseling or therapy that enables patients to develop trusting relationships with mental health professionals who can monitor their progress.

It is not enough to give already anxious, depressed, and financially fragile people a few resources and crisis counselors and let them fend for themselves the rest of the time. Further, without mental health services offered as a main component of the healthcare system, the stigma around accessing them is only reinforced.

How mental health care positively impacts business goals

Kerbel noted that typically, among entrepreneurs, mental health is rarely discussed, mainly because of optics. “Entrepreneurship is scary at the best of times, and many of us feel like we have to hide that and pretend like everything's perfect all the time,” she says. “You don't want to share your worries with people, so you're in your mind having anxiety about it, and that's where I think a lot of entrepreneurs struggle with mental health. They don't let it out.” To help lighten her own mental load, Kerbel participates in a Mastermind group of fellow entrepreneurs that meets monthly which she credits with giving her a sense of community and valuable perspective. She also prioritizes self-care and tries not to catastrophize when things don’t go according to plan. “If something goes wrong, it's not a direct representation of you as a human being,” she says. “It's just something that went wrong.”

Spivak points out that the variety inherent in being in business for oneself, while exciting, can sometimes be a double-edged sword. “It's definitely difficult to stay level-headed at all times because every single day is different in business,” he says. “You can get down on yourself if you have a bad week, or the business has a bad week, or if you launch a product that no one buys—there are a lot of things that happen in business that get in your head.”

Vermunt urges her clients to keep mental health a top priority, especially right now, not just for the betterment of their own lives, but for long-term business planning, too. “Sure, a business can run successfully for a short while if the person at the helm isn't well mentally, but it's not sustainable long-term,” she says. “You can't run a business without good mental health. You'll start making bad decisions or careless mistakes or you'll burn out and be unable to work at all.”

For Amanna, mental health has been something he’s both consciously and unconsciously worked on since discovering boxing at age 12, initially using it as a way to stick up for himself against bullies. “I quickly recognized that boxing wasn't just about trying to punch people in the face,” he says. “It taught me the values of discipline, mindfulness, and love.” The focus, stamina, and agility required of a boxer can only be fully realized if that boxer is mentally healthy. To go the (mental) distance, Amanna relies on daily transcendental meditation sessions and journaling for perspective, mental clarity, and problem-solving. “Whenever I have a problem, I tap into a journal,” he says. “You can think at 1000 times the rate you can type. Typing forces you to rationalize the situation.” He encourages his staff to journal, too.

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There are many components that go into a business owner recovering from a period of significant stress, especially one as unprecedented as the pandemic. Finding community, working out, journaling, and meditation are all wonderful ways to improve mental health, and so is therapy, which Spivak has relied on for almost two years now. “I do quite a lot of therapy and it's become an area where I can unlock breakthroughs,” he says. “A lot of what goes on in our minds every day is just our own story of what we think is reality.”

Vermunt gives therapy a ringing endorsement as well. “I've been quite vocal about encouraging many of my clients to enlist the help of a therapist,” she says. She also notes that people often come to her feeling down on themselves, and many times, it’s because their hearts, minds, and careers aren’t in sync. “I like to think of having a good career as two parallel tracks,” she says. “One is figuring out what you like and going after it, and the other is developing self-awareness, learning what your blind spots are, and getting out of your own way. That's the track that people often forget about, but it's just as important.”

The small business owners I spoke with all agreed that lessons learned during the pandemic have ultimately given them added agility, and thriving during 20 months of extraordinary circumstance has been a blessing. If COVID-19 has taught us anything, it’s to count our blessings because no one really knows what the future holds. All we can do right now is remain adaptable, get vaccinated, wear our masks, and hope for the best.

","The pandemic upended business practices but did anyone ask how our owners managed their mental health through it?","

The pandemic upended business practices but did anyone ask how our owners managed their mental health through it?

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Carla Ciccone is a writer from Toronto. Her work has appeared in The New Yorker, The Cut, Catapult, bon appétit, and more.

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