Are small stores the next big thing in retail?

  • Opinion
  • September 15, 2015
  • Francesca Nicasio
Are small stores the next big thing in retail?

Target, Wal-Mart, and Ikea have plenty of things in common. For one thing, they’re all considered big box stores; and for another, they all have “wallet-friendly” pricing. Wal-Mart has its “everyday low prices”, Target is known for its “cheap chic” strategy and its “expect more, pay less” slogan, while people flock to Ikea to score furniture and homeware items for less. 

But in addition to these shared attributes, Target, Wal-Mart, and Ikea have come to have another important common denominator: All three retailers have started building smaller-format stores.

Take Wal-Mart, for example. Last year, the retail giant opened 240 small-format stores, compared to 120 supercentres. Target is on the same path. For the first time since the company’s inception, Target will open more small stores than big boxes in 2015. According to the retailer, it plans to open nine smaller format stores (such as City Target) and six big box locations.

Meanwhile, in Ontario, Ikea is set to open its first small-format store. The furniture retailer will establish a 20,000 square-foot branch that will serve as a “Pick-Up Point” where customers can pick up the items they purchased online. The store will sell a limited assortment of merchandise, but customers will be able to browse and buy other products using in-store tablets. This Ikea location will also offer services such as home deliveries, assembly, planning, online sales support, and more.

Clearly, there’s a shift happening in big box retail, and it will be interesting to see how this trend plays out and if similar retailers (Best Buy, Home Depot) will follow suit. But perhaps an even more important question is why this is happening. What are the reasons behind the move to smaller store formats and how will they benefit customers and retailers? 

The succeeding points aim to answer these questions. Go through them below then weigh in with your own thoughts in the comments. 

In modern retail, having more products in-store isn’t always better

In the past, many retailers focused on offering wider selections and stocking more merchandise to give shoppers as many choices as possible. These days, however, the retailers that are succeeding are those whose selections aren’t necessarily the largest, but rather it’s those that have the best or localized assortments.

As Chris Petersen, CEO of Integrated Marketing Solutions notes, the “more is better” mentality when it comes to products doesn’t work anymore. According to him, the retailers that seem to be winning lately are the ones that curate assortments. “What that means,” he says, “is carefully selecting the top styles, showing the top models, or offering a showcase of 'good, better, best' instead of trying to stock every color or every single SKU.”

Additionally, modern retail stores aren’t just about “stuff” anymore—they’re about services, convenience, and experiences. Smaller format stores make it easier to implement these things because they allow customers to find what they need faster, and they enable retailers to be more nimble when it comes to reinventing themselves and adapting to the needs of consumers. 

Urban locations call for smaller stores

Millennials—a highly coveted market segment for many retailers—prefer urban locations over suburban areas, making it more difficult for retailers to draw them into their stores. This is why more and more big box merchants are bringing the store to their customers.

It’s also important to remember that convenience and accessibility are more important than ever. We live in an age where people can shop from pretty much anywhere, and they can have their items delivered to their homes or a local store—sometimes in less than 24 hours. These days, few consumers have the patience to drive to a retail store that’s an hour away unless they have a really compelling reason to do so (ex: events, unique experiences, exclusive products, etc.)

That’s why an increasing number of retailers—particularly those that sell commodities—are choosing to build their stores in locations that are close and accessible to shoppers. (And this usually means urban and highly-populated areas.) 

Weigh in

Do you think smaller format stores will be prominent in the future? Can you name other reasons big box retailers are choosing to go small? Let us know in the comments.

 Francesca Nicasio is a retail expert and blogger for Vend, an iPad-based point-of-sale software that helps merchants manage and grow their business. This article was republished from Vend's retail blog, where Vend talks about trends, tips, and other cool things that can help stores increase sales and serve customers better.

​ ​

This is a community discussion forum. Comment is free but please respect our rules:

  1. Don’t be abusive or use sweary type words
  2. Don’t break the law: libel, slander and defamatory comments are forbidden
  3. Don’t resort to name-calling, mean-spiritedness, or slagging off
  4. Don’t pretend to be someone else.

If we find you doing these things, your comments will be edited without recourse and you may be asked to go away and reconsider your actions.
We respect the right to free speech and anonymous comments. Don’t abuse the privilege.


Readings present revised plan for Courtenay Central

  • Property
  • May 16, 2019
  • Radio New Zealand
Readings present revised plan for Courtenay Central

The company that owns Courtenay Central in Wellington says it has big plans for redeveloping the complex - which is closed due to earthquake risks.

Read more

How to tell if you're a born retailer

  • Opinion
  • May 16, 2019
  • David Farrell
How to tell if you're a born retailer

Retail is a profession, but true retailers are born not made, says Dave Farrell.

Read more

Sustainable soap wrapper among major winners at Pride In Print Awards

  • Opinion
  • May 15, 2019
  • Sue Archibald
 Sustainable soap wrapper among major winners at Pride In Print Awards

A sustainable, heat sealed soap wrapper that is claimed to saving tonnes of PET plastic film, petrochemical wax and glue from landfill each year, has won a major award in the Pride In Print industry awards. Sue Archibald, Pride in Print Awards manager, shares more.

Read more

Social scoreboard

Zavy and The Register have worked together to create a scoreboard that compares how the top 25 traditional media advertising spenders in New Zealand have performed on social media over the past 30 days, updated in real time.

Regional rollercoaster
What does retail look like in 2019 for ...
Concept to closet
Business coverage of New Zealand Fashion Week.
Town centres
A positive retail environment over the past 12 ...
Amazon Arrival
Keeping up with all things Amazon as it ...
The Retail Yearbook 2017
As we battle our way through the busiest ...
Hospitality enhancing retail
Some think food and integrated hospitality offerings will ...
The future is bright
We spoke with four retailers in their twenties ...
Spotlight on signage
At first glance, the humble in-store sign might ...
Red Awards 2016
The Red Awards for retail interior design celebrate ...
Auckland Unitary Plan
Auckland is changing. The Unitary Plan will decide ...
How to open a store
Sarah Dunn considers what it would take to ...
All things to all people
Kiwi retailers share their omnichannel strategies.
Rising stars
Retail's top young achievers.
Delivering on your promises
The sale isn't over until your item is ...
Retail in heartland New Zealand
Retailers keep the regions pumping, but how strong ...
Women in retail help one another. We spoke ...
The changing face of retail
Shifting demographics are creating big changes in New ...
The retail yearbook
With the help of experts in the retail ...
Retail rogues
We put the spotlight on staff training. Jai ...
Here come the giants
Topshop has arrived in Auckland’s CBD, David Jones ...
From retail to e-tail
Ecommerce has become part of the way mainstream ...
Window shopping: A spotlight on social media
Sarah Dunn and Elly Strang look at how ...
Loyalty in the digital age
How are retailers maintaining loyalty? Sarah Dunn, Elly ...
The Innovators | In partnership with Spark Business
Technology is rapidly changing the retail industry as ...

Inside Little Yellow Bird’s equity crowdfunding campaign

  • News
  • May 15, 2019
  • Sarah Dunn
Inside Little Yellow Bird’s equity crowdfunding campaign

Wellington social enterprise Little Yellow Bird is seeking to scale its ethical apparel operation to the next level with an equity crowdfunding campaign.

Read more

Auckland design agency wins gold for retail packaging

  • News
  • May 14, 2019
  • Courtney Devereux
Auckland design agency wins gold for retail packaging

As a benchmark for impeccably designed packaging of consumer products, The Dieline Awards this year saw creative agency Onfire walk away with recognition for fantastic design for their retail products. We spoke with Matt Grantham, creative director at Onfire Design, about the importance of a strong visual brand in the retail product sector.

Read more

BYO containers policy live from June 1 at Foodstuffs stores

  • News
  • May 14, 2019
  • Sarah Dunn
BYO containers policy live from June 1 at Foodstuffs stores

Customers at Foodstuffs supermarkets’ instore butchery, seafood counter, delicatessen and bakery will be able to have food packed into their own clean, leak-proof containers from June 1.

Read more
Next page
Results for
About us.

The Register provides essential industry news and intelligence, updated daily. And the digital newsletter delivers the latest news to your inbox twice a week — for free!

©2009–2015 Tangible Media. All rights reserved.
Use of this site constitutes acceptance of our Privacy policy.

The Register

Content marketing/advertising? Email or call 022 639 3004

View Media Kit