The Rise of Small-Format Stores: How Retailers are Finding Success in Less Space
Retail has come a long way from the days of small, family-owned shops. With the rise of national and international chains with large retail footprints, it seemed that bigger was always better. However, recent trends have shown a shift towards smaller stores as retailers discover the benefits they can bring.
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 significant increases in visits and sales with their smaller store formats.
Placer.ai Head of Analytical Research R.J. Hottovy explains why retailers are turning to small-format stores:
1) Better economics for attracting visitors in less-dense markets
2) Targeting ideal customers more efficiently
3) Utilizing these stores as part of an omnichannel strategy for delivery or pick-up fulfillment
Hottovy notes that location and accessibility play key roles in the success of these smaller spaces compared to larger ones. In fact, he believes that while larger format stores will still remain popular due to their experiential offerings (such as Dick’s Sporting Goods’ “House Of Sport” concept), there is great potential for continued growth among small-format strategies.
For instance, Sprouts uses its compact locations to provide convenience for shoppers while Bloomingdale’s highly localized neighborhood concept has been well-received by urban and suburban areas alike. Even wholesale giant BJ’s saw success with its test store in Rhode Island which offered a more streamlined shopping experience compared to traditional big-box warehouses.
Hottovy predicts that we will continue seeing positive results from this trend over the next few years: “Given the success [of] driving higher visits per square foot…we expect smaller formats [to] continue being a popular option for retailers through 2024 and 2025.”
In conclusion, it’s clear that smaller can indeed be better for retailers looking to optimize their operations and cater to the needs of today’s consumers. With increased visits and sales, it seems that the future is bright for small-format stores in the retail landscape.
