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Comment: Smaller stores delivering big results

When refreshing the front of my house recently, the large container of masonry paint was ordered online for collection the next day from the B&Q store… View Article


Comment: Smaller stores delivering big results

When refreshing the front of my house recently, the large container of masonry paint was ordered online for collection the next day from the B&Q store on the high street around the corner from where I live.

This extremely convenient shopping experience was only possible because of the company’s strategy of opening smaller format stores on local high streets – initially in London but this is being broadened out – that include a compact range of frequently bought goods but the outlets crucially serve the purpose of acting as collection and return points for online orders.

This strategy is being replicated by a growing number of brands that had typically operated from chunky stores – often on retail parks – but these companies now recognise that the future of the store is to increasingly fit into a broader multi-channel eco-system. This means the previously necessary move of stocking a gazillions of lines encompassing myriad sizes, ranges and variants is no longer required in the age of being able to order online and collect from the local store – and return unwanted goods into the store too.

Other major names pursuing this strategy include Screwfix, Majestic Wines, Dobbies, IKEA and Pets at Home, with each of these operators recognising that the smaller urban stores are perfectly suited to Gen Z shoppers who are not necessarily up for spending hours traipsing around large sheds searching for the relevant products and then lugging bulky goods home. While retail does have its therapeutic aspects (so I’m told by those people who know about these things), there are also many shopping missions that demand a more sniper-like in-and-out strategy.

This trend is not restricted to the UK because the US is also experiencing an array of brands rolling out smaller footprint stores that have the requisite curated offer and serve the role as fitting into the multi-channel model of the modern retailer. Among the names pursuing this strategy are Macy’s, Nordstrom, Kohl’s and IKEA.

Highlighting the trend is data from real estate company JLL that found almost two-thirds of US leasing deals completed in Q1 of this year were for spaces of 2,500 sq ft or less. Gone is the big demand for 5,000-10,000 sq ft units. JLL points to the ongoing trend for speed and convenience as a major driver of this phenomenon. It finds the move to smaller sites is also reflected in the fast food brands who are all looking at compact footprint units that are predominantly serving digital orders. They have largely jettisoned the dine-in aspect and in many cases a collection window and some kiosks suffice.

There is no doubt that this rethinking of the required store size will not see a wholesale shift to smaller units because there are still many large flagship stores being opened in premium locations by large brands but these are increasingly complimented by smaller stores. This mix-and-match approach replaces the cookie-cutter tactics of old where outlets were all pretty much the same size regardless of their location.

The task facing all retailers operating physical space is to define a real estate strategy that best services their requirements, which invariably involves multi-channels. A fully holistic approach needs to be adopted in order to ensure the optimum square footage, location and operating practices are deployed. This should deliver just what the customer requires, including good old masonry paint.

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