What A Retail Showroom Can Do For Rising Brands

The term “showroom” in retail is a loosely defined alternative to a store. However, at its core is the idea of a physical space showcasing a product rather than acting primarily as a transaction point. Arguably, this is a trend for overall retail, but few brands have honed in on the sole purpose of display.

Some showrooms taking the industry by storm are Showfields, which defines itself as a “lifestyle discovery store.” It assigns pockets of the store to brands that then custom-build and design shop-in-shops. Similarly is Neighborhood Goods, an Austin-based new type of department store. However, these models differ from wholesale because they don’t purchase the inventory.

Scent Lab, an NYC-based candle company known for its personalized scent profiles, recently launched in Chelsea Market’s Neighborhood Goods. “We’ve done several real-life activations since launching, which have been such a hit! Customers love the experiential component of our business and experience it in person. We have always been bullish on launching into retail, so Neighborhood Goods is a great starting point to test and learn,” Ariana Silvestro, Founder and CEO of Scent Lab, shared. The brand uses this showroom experience to gain insights into how customers interact with the product in person before launching more extensive wholesale partnerships.

Showrooms allow for more profit than wholesale but lower costs than standalone stores.

Beyond a showroom’s advantage as a testing platform is its economic advantage as a cheaper and more flexible way to bring products to customers in real life. And this includes shop-in-shops, where the store itself may operate as a standalone retailer, but brands can rent space to showcase their products. It’s shared with growing direct-to-consumer brands, like Our Place, which has a shop-in-shop in Nordstrom in NYC, and even e-commerce marketplaces like Petco, which recently announced a shop-in-shop concept across Canada’s Canadian Tire.

Sometimes this also takes place in smaller, more boutique retail stores. For instance, P.F. Candle Co., which has an online presence and two stores, has recently shifted its strategy to hosting shop-in-shops. “We wanted to get together with fellow small businesses and like-minded brands that might have also been hit hard by the economic conditions of the past year. Not only has inflation impacted us and many of our peers, but we’ve also seen a spending shift to experiences over just plain goods,” stated Kristen Pumphrey, Founder and Creative Director of P.F. Candle Co.

In November, the company hosted East Fork Pottery in its Echo Park store in Los Angeles. It saw a 70% increase in revenue during that week and a 111% increase in foot traffic. However, it usually sees a traffic lift between 20-40% outside the holiday season. Overall, a notable impact on the business.

The showrooms are a marketing platform for other channels and the brands they host.

Undoubtedly, these showrooms benefit the brands, but what’s the advantage of creating a showroom in the first place?

Babylist, an online marketplace, and registry for everything baby related, recently announced plans to open its first permanent showroom based in Los Angeles. Last year the company tested the concept with two pop-ups – one in LA and one in NYC. “We wanted to test a concept that served the user’s need in a very different way than big box retailers. So we decided to rent these big, beautiful houses and put all the products there. People loved that. They were like ok, this is where the bottle warmer will go on the kitchen counter; this is what it looks like to have a bunch of bottles in the cupboard. So it was this interactive experience and was much more helpful than seeing a highchair in an aisle or on a shelf 10 feet up,” Lee Anne Grant, Chief Growth Officer of Babylist, shared.

Another unique feature was their stroller track with various terrains and weighted babies, so customers (even those still pregnant) could feel what it was like to use the strollers. In addition, throughout the showroom were various QR codes, which guests could scan to learn more about products and add them to their registry. The new permanent store will have the same features as the pop-ups but be more prominent at 14,000 square feet.

The company generated $290 million in revenue in 2022, a 20% growth from the year prior. In addition, it’s the number one site for childcare in the US, and this new showroom allows brands on its site to showcase products in person while Bablylist grows its online customer base.

The showroom is a marketing platform for brands and e-commerce marketplaces. And, in today’s world with rising digital advertising costs, physical store marketing is a great and cost-effective alternative, especially when it doesn’t come at the expense of high capital or reduced margins. Therefore, more and more brands and marketplaces will likely turn to showrooms for their marketing needs.

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Correction: A previous version of this article stated that East Fork Pottery hosted P.F. Candle Co. in its store, rather than the other way around.