Retail Collabs: Specialty Stores Continue to Branch Out
Specialty retailers — or retailers solely focused on a singular category of product — continue to face headwinds as broadline retailers expand cross-category offerings and direct-to-consumer options grow.
Target recently partnered with FAO Schwarz for the holiday season to expand its toy offering. This follows the announcement last year that Toys R Us would be returning via a collaboration with Macy’s that rolled out to all stores.
These partnerships are mutually beneficial for both retailers: the specialty retailer brings deep expertise in a specific category while the broadline retailer provides more points of distribution and a broader reach.
In the context of today’s retail industry where consolidation of specialty retailers continues, these collaborations provide little risk to the retailers and generate excitement from the consumer — especially during the critical holiday season. We’ve also observed this trend in the beauty industry during the past few years, with the highly touted collaborations between Ulta and Target and Sephora and Kohl’s, both of which were expanded beyond the initial pilots. Expect these partnerships to continue as specialty retailers look to new expanded distribution and reach, and broadliners need to inject life into their assortments with limited liability.