Big Box Retailers Should Think Small To Grow Sales

  • In the era of big box retailers, we have been provided with massive stores with a huge assortment of products and prices to fit almost every need.  This strategy has proven to be successful for companies like Superstore and Walmart.  But, there is a growing demand for something else.  Consumers are looking for smaller!

    Dollar stores have been capitalizing on their small store formats of low-priced items.  These stores have proven to be very profitable ever since the recession hit and people started increasingly looking for low cost alternatives.  Walmart was no longer the only lowest priced retailer in town.

    Consumers like the convenience and consistency provided by familiar brand names on smaller, more targeted stores.

    Some big retailers have started developing small test store formats. But can they do it successfully?

    In 2011, fifteen Walmart Express stores opened up.  These stores are approximately 15,000 square feet, whereas the typical Walmart Supercentre is 185,000 square feet.  Target plans to launch four City Targets in 2012 and 2013, which will be half the size of regular stores.  Best Buy, Staples and Office Depot are also looking at developing smaller format stores.

    These smaller store formats will partly be successful depending on the efficiency in the back end.  They can either use their supercentres as distribution centres or they can find cost effective ways to ship and shelve their products.

    Retailers also have the option of developing smaller store formats within existing stores.  Superstore has a spacious front lobby that could easily accommodate a section of low-priced, convenience items that consumers would not have to travel the entire store to find.  This would help improve the price image of Superstore.

    It would be nice if you could quickly run into Superstore on the way home from work and pick up some milk and eggs at the front.  This would be a quick in and out providing the lower prices Superstore passes on to its customers.

    This would help drive incremental sales and shopper trips for Superstore which they are currently losing to smaller format retailers like Safeway and Sobeys.

    Target has already developed “Dollar Spots” at the front of their stores.  Craft supply store Michaels has also started to do the same.

     

    The extreme value end of the market is being redefined as big retailers are starting to venture more and more into smaller formats.  Local mom and pop stores, pharmacy chains and coupons and daily deal websites are all vying for position.

    The downsizing trend seems to be here to stay, so lets keep an eye on possible smaller store formats and smaller stores within stores to see what consumers will be provided with in the future!

     

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