Dive Brief:

• Hy-Vee has opened DSW Designer Shoe Warehouse shops inside two of its supermarkets in the Minneapolis area, the grocer announced on Monday. Another two of the so-called "shop-in-shops" are set to open on Friday, with two more set to begin operations on Oct. 2.
• The store-within-a-store arrangement is part of a partnership between DSW parent company Designer Brands and the Midwestern grocer that was revealed in April.
• Designed to enable grocery and apparel shopping at a single location, the shops allow customers to try on shoes from a range of brands. Some locations will include lockers where customers can pick up footwear ordered from DSW's website.

Dive Insight:

Hy-Vee's move to add shoe stores to supermarkets represents an effort by the grocer to adopt an element of mass retailers such as Walmart and Target, which carry a broad array of non-food products in addition to groceries.

Many mass retailers such as Kohl’s — which has partnerships with Amazon and Aldi to repurpose some of its selling space for grocery stores — are making moves to scale back their physical store footprints and rent costs amid the rapid acceleration in demand for online shopping. A recent retail analysis by Moody’s predicted online shopping sales to exceed 25% of all retail sales over the next five years, while shopping mall store footprints could shrink by 20%. 

While grocery spend is higher this quarter than in 2019, consumers have been spending less time in-store and were less inclined to browse, according to research by food industry trade group FMI. The store-within-a-store may be aimed at lengthening shopping trips and encouraging more frequent trips to Hy-Vee, while offering contactless pickup for consumers who are nervous about spending lengthy amounts of time indoors.

In April, states including Vermont and Michigan had even barred big-box stores from selling nonessentials in an attempt to curb foot traffic. But as states have reduced restrictions on in-store shopping, retailers are hoping that demand will pick back up.

The DSW shop-in-shops are not Hy-Vee’s first experiment with apparel. The grocery also partnered with Canadian fashion retailer Joe Fresh last year. Its Twin Cities location in the Savage neighborhood, whose DSW shop-in-shop is scheduled to open in early October, also unveiled a cosmetics and beauty section back in 2017.