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Store-Within-a-Store Concept Helps Retail Businesses Stay Afloat

By Serena Solomon | August 19, 2014 7:33am
 Some merchants say they avoid high rents and gain additional customers by sharing retail space.
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INWOOD — Anina Young, the owner of Brazen Lingerie, has an unusual business partner.

She's shared a ground floor retail and office space in an Inwood co-op with Jerry Christal from GWB Insurance Brokerage for almost two years. It's an arrangement that has kept both afloat, according to the two owners.

Rent and bills are shared. So is wisdom and encouragement.

Some business owners, such as Young and Christal, are pushed into "store-within-a-store" partnerships by the financial burden of renting their own space. Some use it as a stepping-stone, eventually graduating to their own space. Others use it to gain customers and clout by partnering with like-minded brands.

"It's the only way to do business," said Christal, who was in dire need of help when he sought a subtenant.

Brazen Lingerie now covers 40 percent of GWB Insurance Brokerage's rent and Young, who had already shut down a different location for her business due to a drop in customers, said her overhead costs are a fourth of what they were when she had her own storefront.

The two businesses have even collaborated when Christal spoke about life insurance at an event Young hosted for expectant mothers.

"If you're in the market for insurance, a driving lesson and a bra, really there is no other place," joked Christal, who also runs his family's driving school, Uptown Driving School, out of the space.

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Real estate agents or business consultants do not tend to broker store-within-a-store partnerships.

The businesses interviewed by DNAinfo New York found their arrangements through personal relationships. It's difficult to measure an increase in businesses sharing spaces, but those that do it said they have noticed more companies that buddy up.

The partnership between Shinola — a Detroit watch and accessories brand with a global reach — and NoHo-based café The Smile was forged on similarities, according to Shinola's creative director Daniel Caudill. The Smile's second location sits among the high-quality watches, bikes and wares of Shinola's flagship store in TriBeCa.

"We are always looking for companies that have a like-mindedness in regards to making quality products and how things are made and what goes into it," Caudill said.

He said the site, sound and smell of the café brings the luxury goods store a "no fuss" feeling and the two brands attract a similar customer base.

Fellow Barber on North Eighth Street in Williamsburg is capitalizing on an awkward side room that was formed to meet Department of Building regulations.

Instead of settling on a permanent tenant, the barbershop has signed short-term residences, partnering previously with California fragrance distillery Juniper Ridge and currently with the locally-owned florist Fox and Fodder Farm.

"We like to bring in brands that complement our brand or a floral shop, it's left field but it visually complements our store," said Robert Pettersen, Fellow Barber's chief operating officer.

Each subleasee contributes differently to occupy the 150-foot side room attached to Fellow Barber's 3,000 square foot shop: some rent, some trade, some pay nothing.

For the smaller business, the temporary summer residence within Fellow Barber is a testing ground for a future retail expansion, according to Fox and Fodder Farm owner Taylor Patterson.

Patterson's business was built around creating arrangements for offices, restaurants and fashion shows. 

"It is a nice little stepping stone to feel it out if retail is indeed the direction I want to go," Patterson said.

But partnerships don't always go well.

Cupcake Café, a subtenant of Books of Wonder's that crumbled in 2011, almost brought the 34-year-old independent bookstore down with it, according to Books of Wonder's owner Peter Glassman.

Although customers benefited from the combination of coffee and books, the main reason for the partnership was to help with rent at 18 W. 18th St.

Despite a detailed contract — even down to the percentage of electrical bills each had to pay — the Cupcake Café left owing money and Books of Wonder "operated at a loss for a few years," Glassman said.

Now the bookstore has a partnership with City Bakery and its Birdbath Café.

"They had survived the recession," said Glassman. "They actually expanded the Birdbath Cafe, so I thought, 'This is solid ground.'"

Flower Girl NYC shared a Lower East Side storefront with luxury jean brand Earnest Sewn from 2007 to 2012.

While the partnership helped owner Denise Porcaro guage the benefits of a retail space without taking a huge risk, Flower Girl NYC had to fit into the look of Earnest Sewn and that began to feel like a restraint.

"We wanted our own four walls," said Porcaro. And she now has her own space at 245 Eldridge St.

Even though GWB Insurance Brokerage and Brazen Lingerie have a strong relationship, a detailed contract is important, according to Christal.

He advised businesses to require subtenants to have their own insurance in case of a lawsuit. As the landlord, Christal saw it has his responsibility to set a tone for open communication between the two businesses.

"That is probably more important than anything else I have done," he said.