Retail has evolved significantly over the years, from small family-owned shops to large national and international chains with massive footprints. However, there is now a shift towards smaller stores as retailers discover the benefits of utilizing less space.
According to an article by Placer.ai titled “Small Format Stores – Sprouting, Blooming and Expanding,” retailers such as Sprout Farmers Market, Bloomingdale’s and BJ’s Wholesale Club have seen an increase in visits and sales with their smaller format stores. Placer.ai Head of Analytical Research R.J. Hotttovy explains that this trend is due to better economics for attracting visitors in less-dense markets, targeting ideal customers more efficiently, and incorporating these small stores into omnichannel strategies.
Hottovy emphasizes that location accessibility plays a significant role in the success of smaller-format stores which also tend to be more cost-effective than larger ones. For example, Sprouts uses its compact locations for added convenience for consumers while Bloomingdale’s “Bloomies” concept has been well-received in both urban and suburban areas. Even wholesale giant BJ’s saw positive results from their test store using a smaller format strategy.
However,Hottovy notes that larger retail spaces are not going away anytime soon; Dick’s Sporting Goods’ experiential “House of Sport” format being one example along with regional grocers like H-E-Band Hy-Vee pulling customers from broad trade areas.
Despite this competition,Hottovy predicts continued success for small-format strategies due to increased visits per square foot,better customer targeting,and lower operational costs.”Given these advantages,” he adds,”we can expect retailers will continue implementing smaller formats through 2024-2025.”
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