Big Retail Embraces Small Format

As the marketplace evolves to meet modern demands, brick-and-mortar retailers are continuing to look for new and unique strategies to connect with their customers. Over the past few years, well-known retailers such as Target, WalMart, Best Buy, and Nordstrom have invested in a new small-format store approach, developing scaled-back store locations with smaller footprints and narrowed merchandise offerings. These nimble, small-format stores are designed to provide a more convenient, speedy, and targeted shopping experience that appeals to new and expanded customer demographics.  

Expanded market presence

Where traditional, large retail footprints require massive amounts of development space, small-format style stores allow retailers to be flexible in their layout and choice of locale. This has enabled them to service previously neglected markets: namely urban centers, dense suburban areas, and college campuses. By creating accessible downtown locations, retailers are able to target affluent and young city dwellers, establishing brand presence and building loyalty with new generations of customers.

Streamlined offerings

Small-format stores are intended as one-stop shops for quick and convenient trips, offering a much more limited assortment of products available for purchase; there may not be everything, but there is a bit of everything. A college campus location might feature an assortment of school supplies, convenience food, and alcohol; an urban location might eliminate the majority of children’s clothing offerings in favor of fashionable work basics and athleisure wear. Shelf space is reserved for key categories of merchandise and a curated inventory, reducing clutter and unnecessary stock to provide a simple, straightforward, and relevant shopping experience. 

Local merchandise featured at a small-format Target store in Minneapolis.

Hyperlocalization

The small-format store approach provides retailers an ideal means to experiment with localization. With the flexibility to adjust product assortment and services, specifically tailoring the offerings of each location to fit regional and local demographic needs and interests, small-format stores are capable of establishing a much more personalized, meaningful shopping experience for customers. Additionally, smaller stores show a greater ability to respond to sales data and customer input, continually adapting inventory to maximize efficiency and selling potential.

A turning point for retail?

The small-format store trend is continuing to accelerate over the long-term, with some promising results thus far. Target has reported its 44 small-format stores are showing “easily double” the productivity per square foot as that of its traditional stores. It is clear that the one-size-fits-all approach to store planning is out the door, and more versioned marketing will become increasingly necessary to drive success across diverse store fleets.