U.S. Stores Go Smaller, Try Makeovers for Increased Sales

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U.S. Stores Go Smaller, Try Makeovers for Increased Sales


NATIONAL REPORT -- U.S. retailers are struggling to determine an ideal store size, as larger companies try shrinking down and smaller ones seek to grow, especially as urban locations become more important, according to a Reuters report.

"It was just all about new store expansion and I think we've come to a tipping point," said Steve Caine of Bain & Co.'s global retail practice.

These days, more consumers are choosing to live in or near cities, where space is at a premium. Additionally, online retailers such as Amazon sell a greater number of goods more conveniently. In order to cope with this changing economy and stay in business, retailers are trying new strategies.

"That is encouraging people to think smaller, and then the need to get into the urban cores will bring, on average, most retailers' store sizes down," said Caine.

Walmart is one major retailer experimenting with smaller formats in recent years, as CSNews Online has reported. Although the company shuttered its groceries-based Arizona Marketside stores earlier this month, it continues to build new Walmart Express stores in urban and rural locations.

"If they could wave a wand, a lot of them would completely reconfigure their stores," said Chris Donnelly, senior executive in Accenture's retail practice. "They'd probably close a lot of stores and the remaining stores would be smaller."

Target is following Walmart's lead, cutting down from 135,000-square-foot locations to 60,000 to 100,000-square-foot stores in cities. The first CityTarget store is scheduled to open in Chicago next summer, followed by locations in Los Angeles, San Francisco and Seattle, according to the report.

Target is also seeking to broaden its offerings by adding fresh food sections to existing stores -- a change other companies have also been experimenting with more recently.

"When you're trying to steal share, it's about doing what your competitors do, but better, or layering in new businesses," said Caine. "It's a little bit of a redefinition of what you are in the customer's mind."

Other retailers changing formats include Dollar General Corp., which is opening and remodeling its smaller Dollar General Market stores that include refrigerated and frozen foods, as well as Meijer, which recently opened its first Meijer Marketplace at half the size of its traditional stores.

"Our interest in trying to adapt the size of our store is coming more from a recognition that communities are going to grow inward, not outward," said JK Symancyk, Meijer's executive vice president of merchandising. "This, in the end, is less about a magic formula of square footage; it's more an exercise in localization."