As the holiday season approaches, more and more retailers are rethinking the size of their stores to cater to changing consumer needs and behaviors. Ikea, known for its large big box stores, has recently opened smaller format stores in locations like Gaithersburg, Maryland. Other retailers like Target, Macy’s, and Nordstrom have also experimented with smaller stores over the past decade.
According to Roger McMahon, a marketing professor at Pepperdine University, the trend of shrinking stores has been going on for decades but has gained momentum in recent years due to the rise of online shopping. Retailers are now focused on maximizing revenue per square foot, which can be more challenging in large stores with wide aisles and non-revenue generating spaces. Smaller stores can create a more intimate shopping experience while increasing revenue per square foot, benefiting both customers and retailers.
While some customers appreciate the convenience and coziness of smaller stores, others prefer the selection and variety offered by larger stores. Retailers like Macy’s have been experimenting with smaller format stores to attract customers and break free from traditional mall settings. Data from Placer.ai shows that retailers can still attract customers in smaller suburban and rural markets without the need for large stores.
Michael Zakkour, a retail consultant, emphasizes the importance of providing varied options and choices in physical retail to meet consumer demands. Retailers like Walmart are exploring new formats like commerce on Roblox and livestream shopping to engage customers in different ways. For Ikea, smaller stores offer a cost-effective way to reach customers and provide local delivery services.
Overall, the trend of optimizing store size reflects the changing retail landscape and the need for retailers to adapt to evolving consumer preferences. By offering a mix of smaller and larger stores, retailers can provide a personalized shopping experience while maximizing revenue per square foot. As consumers continue to seek convenience and variety in their shopping experiences, retailers will need to find innovative ways to meet these demands.
