I’m not sure if you’ve noticed, but it seems like you can’t pick up a paper or click a mouse lately without reading about some big-box retailer rolling out its smaller store format. Target has its new 60,000-square-foot CityTarget concept, while Walmart has Walmart Neighborhood Market and Walmart Express stores. It seems like everyone is downsizing.
What’s interesting to me about these examples is that all of them involve changing the retail/brand fundamentals in order to fit into smaller store prototypes—Walmart Express is not just a smaller version of a traditional Walmart store; it’s a whole new concept. What about actually finding ways to adapt existing retail concepts into smaller layouts? These players are clearly trying to “shake things up” in order to have a little bit more flexibility and, in some cases, get a foothold in urban areas, but it seems like they’re making some strong compromises to do it.
What’s even more interesting to me is what retailers like Office Depot and Best Buy are doing. They’re fitting their full line of products and existing brand concepts into smaller footprints. I recently saw plans for a new 20,000-sq.-ft. Best Buy, and wondered, “What took them so long?” I’m not talking about a Best Buy Mobile, but a classic Best Buy in a smaller format. Maybe it was the pressures of the recession, but I think these newer, smaller formats are the inevitable result of retailers asking themselves the tough questions about efficiency and then figuring out which departments actually generate more sales per square foot. With less wasted space for surplus inventory and more effective floor plans, some retailers are realizing that they can offer virtually the same selection in a much smaller space. It’s a great solution for retailers like Best Buy and Office Depot with high-value products that don’t take up a lot of space. It’s also a way for retailers to continue expanding by opening up in markets that aren’t a great fit for a full-sized store and relocating existing stores within a marketplace.
Retailers used to think consumers saw bigger stores as more exciting. But I see that perception changing. I’ve personally seen plenty of examples of retailers expanding their prototype stores and generating little–if any–additional