Is big always better? Do good things always come in small packages? For retailers, these popular sayings take on new meaning when it comes to designing layouts and store designs that will appeal best to shoppers. In addition, their answers keep changing, as the retail market shifts and changes too.
In particular, big box retailers once were all the rage. But in recent years, some of the most famous examples of these retailers have pivoted toward opening smaller versions, such as Walmart’s 3000-square-foot convenience stores, Nordstrom’s display shops that carry no actual inventory for sale, and IKEA’s urban retail locations that are approximately one-third the size of its normally vast stores.
These small stores offer notable advantages to both retailers and their customers. In particular, the retailers can locate in more diverse areas; for example, Target determined that it could really only reach shoppers in cities if it opened small stores in urban locations, rather than insisting on its maintaining pattern of massive stores in rural or suburban sites. They also tend to be less expensive to run and maintain.
In addition, the smaller stores align with and reinforce an omnichannel strategy that relies on seamless links across channels. Shoppers can make purchases from the retailer’s vast online inventory, have the items shipped to their local store, and then pick up the items later. It would be nearly impossible for a small, local store to keep all these items on hand though. The convenience of these locations encourages consumers to make use of “click-and-collect” options. Furthermore, because of their localness, the small stores can effectively tailor the assortment they keep on shelves to the preferences of nearby shoppers.
Still, the stores inevitably suffer from limited inventories, and they generally cannot support the sort of one-stop shopping that makes big box stores so appealing to many consumers. Therefore, the key seems to be finding just the right size and mix of stores to ensure that all consumers are getting just what they want from the retailer.

Discussion Questions:
1. Which retailers are opening small store formats?
2. What are the advantages of such a move?

 

 

Source: Chris Petersen, Retail Wire, September 24, 2018