Big Box Stores Focus on Smaller, More Strategic Spaces
Bigger is not always better! Once-dominant big-box stores are starting to evolve into smaller footprints. These retail giants, known for sprawling warehouses and vast selections, must grapple with a new reality. Since the pandemic, many consumers prefer the convenience of online shopping. This leaves retailers with excess space and the need to adapt.
The team at terra alma has been watching this shift and its impact on the retail industry. Here is what we see:
E-commerce Disruption
Consumers no longer have to leave their homes to shop. They can browse extensively online while comparing prices and product features. Best of all, heavy or bulky items (think paper goods – toilet paper, paper towels) can be delivered directly to their homes. This convenience has eroded the traditional value proposition of big-box stores, once considered the one-stop shop for everything. As a result, larger chains no longer need as much space.
Reaching New Horizons
The shift toward smaller stores actually creates some cool opportunities for megastores. Previously, malls and big-box stores were located in the suburbs where land was more abundant and less expensive; now, with smaller footprints, big-box stores are able to target more densely populated areas.
Smaller Specialized Stores
IKEA is introducing smaller model stores to focus on interior design planning with IKEA experts. These Plan & Order Point locates allow customers to purchase their selections, ask IKEA employees about specifications or installation, and pick up or deliver the order. These small stores are set to open in Austin, Atlanta and Los Angeles.
Macy’s has taken a similar approach, introducing a compact store, Market by Macy’s, which is set to appear in 30 locations by 2025.
A front-runner for this growing trend, Kohl’s opened 20 smaller stores, each around 35,000 square feet, compared to the typical store, which is 80,000 square feet. The retailer plans to open 100 additional sites by 2026.
Best Buy is testing small-format stores, closing large ones and opening smaller ones in the same area. The small stores are 5,000 square feet and offer a curated selection of products, including Geek Squad services and more.
Customer Benefits
Smaller shops offer a smaller, curated merchandise selection, creating a faster, streamlined shopping experience. This translates to a less stressful shopping experience, especially if you can quickly find what you are looking for and check out in a short, fast checkout line.
Smaller stores naturally foster a stronger sense of community and personalized service. With more manageable space, staff is more focused on customers.
The Downsizing Precedent
The rightsizing trend is more than merely theoretical. We're already seeing it play out across various retail sectors. Retail giants like Sears, Kmart, Macy's and JCPenney have all faced declining sales and responded by closing locations and opting for smaller footprints. Electronics stores like Best Buy are streamlining some locales, reflecting the shift toward online electronics purchases. Similarly, clothing retailers like Abercrombie & Fitch are embracing compact models to adapt to changing consumer preferences.
The terra alma team is ready to help you develop a new strategy to meet your sales and business goals in today’s changing retail environment! Contact us today to meet your 2024 Business Resolution!