Nobody ever accused the retail business of going against the tide. Like many industries, it tends to be rather conformist. If there’s an idea that one retailer jumps on, just wait a minute—others will quickly follow.
Which is why the latest trend for big national retailers to become big national retailers that operate smaller stores is both unsurprising and fascinating. After a decadeslong dash to open bigger and theoretically better stores, companies are rethinking that strategy. And every time you turn around, another brand is working on the same plan.
The strategy first arose noticeably at Walmart and Target. More than a decade ago, each began to open smaller stores, in various shapes and sizes, with different merchandise mixes. Some were focused on one category, like grocery, but others were miniaturized versions of the main brands, offering a pared-down assortment of what you could find out on the highway.
Location was key. Perhaps anticipating the shift in shopping trends away from big malls and downtown urban centers toward the suburbs, exurbs and wherever work-from-home shoppers could be found, these smaller stores tended to be situated in neighborhoods.
Others wasted no time getting with the program. Kohl’s talked about smaller footprints, even if it didn’t really do much about it. Macy’s was more assertive, opening test stores in the Dallas market several years ago and following that up with additional stores in Atlanta and other areas.
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Now Macy’s—under new CEO Tony Spring, who takes the job in a perilous moment when the company is under attack from the outside—is doubling down on smaller stores as a centerpiece of its new strategy. Originally branded as Market by Macy’s, but now simply called Macy’s, these mini-stores are primarily focused on the apparel and beauty categories, with a smattering of soft goods like bed and bath. A few weeks ago, before Spring took over, the brand said it would not include housewares (furniture was never even under consideration), but don’t be surprised if that edict changes: His first job at Bloomingdale’s was as a housewares buyer, and he eventually ran the full home department before running the entire store.
In conjunction with opening these smaller stores, Macy’s is closing as many as 150 old-line legacy locations—and opening some full-size stores under its Bloomingdale’s and Bluemercury banners. If this works, it’s a pretty radical remake of the entire organization … a big “if” to be sure.
The let’s-get-small movement got yet another convert earlier this week, this time in the grocery channel, when Amazon said it would open condensed Whole Foods stores as it continues to struggle with that acquisition.
We’ve seen a little downsizing in furniture retailing too. Most of Ethan Allen’s new stores are cozy locations, under 10,000 square feet and sometimes as small as 5,000. For a sector where big dealers like Nebraska Furniture Mart and Rooms To Go open locations the size of housing developments, that’s a radical departure.
So, is smaller actually better? Certainly, proximity to where shoppers live has got to be a plus, and let’s not forget the reduced operating costs in rent, overhead and staffing. Those are big factors. But while efficiency is good, is it at the heart of retailing?
When you go into the giant Nebraska Furniture Mart outside of Dallas or Kansas City, or step into the magnificent RH Gallery in the Meatpacking District, you feel you are somewhere and can get caught up in the exuberance of shopping. Those smaller stores are more utilitarian, if you will, and promise a different experience. Not better, not worse, just … different.
I have a feeling this downsizing trend will eventually peter out and somebody will open a giant new store, starting the whole industry off back in the opposite direction again. (In fact, both Walmart and Target have recently announced new rounds of store openings that will primarily be full-size formats.)
Right now, it’s like the high-waisted wide-leg jeans that have overtaken the low-rise skinny jeans that had dominated for years: It’s just … different.
– Warren Shoulberg