Small Is The New Big

22 09 2010

For the past 50 years, the retail mantra has been “bigger is better.” Why occupy only 100,000 square feet when you can build 150,000? Why stock only three lines of underwear when you could carry six? Shoppers will be mesmerized with the magnitude of the display, and hypnotized into a buying trance.

And so our retail landscape has come to populated with ever more of the big box category killer stores that seemingly know no limit in store size or depth of product coverage. Entire strip malls of these cavernous shops line suburban streets at every turn. For a store to carry 100,000 stock-keeping units is no longer a big deal. Come on in and spend a few hours…and a few hundred bucks.

Leading the charge of this size brigade has been Walmart. In the early-90s it grew discontented with its small-town format and decided to blow the roof off what was then considered normal. Soon there were 200,000 square foot Walmart Supercenters popping up everywhere, enticing shoppers with a complete grocery, auto service, pharmacy, clothing, electronics, crafts and more. There are some Supercenters topping 220,000 square feet, more than enough space to park a few jets.

But if the current recession has taught us anything, it is that size brings with it a price. It costs a lot of money to maintain those retail behemoths, and with same-store sales down at Walmart for the last 5 quarters (as compared to the same quarter a year ago), a new formula is needed.

Enter the new and improved, small Walmart.

Although WM has been quietly testing the Marketside concept for a couple of years, it is now going full bore with them. These 20,000 square-foot shops can be shoe-horned in just about anywhere, be it small town America, the suburbs, or in the urban jungle.

And this may be just what the financial doctor ordered, because this new format allows WM to enter markets it would once find difficult to occupy. Like New York City. Chicago. LA. There simply isn’t much real estate available for a 200,000 square foot store (even on multi-levels) in our nation’s largest cities. But there’s plenty of vacant storefronts.

Furthermore, smaller stores may actually put shoppers in a better frame of mind. I know that this one will be. While I crave exercise, I really do not prefer to get it while shopping. A typical WM shopping experience can easily amount to a couple of miles behind a cart. And never you mind for one minute the joys of parenthood and its nightmarish “Can I have this?” pleas from those half our size.

To be honest, I’m not sure why WM didn’t do this earlier. They have dabbled with Neighborhood Markets (at 42,000 square feet) for a solid decade, but have not leveraged the ability to strategically insert stores in crowded neighborhoods, or between Supercenters to better cover entire markets.

But now that the recession has even stung the world’s largest retailer, they are all ears for any ideas on how to increase sales. If it so happens that they gain sales in urban areas not previously served, all the better.

Because sometimes, smaller really is better. Put that in your cash register and smoke it.

Dr “Size Matters” Gerlich


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