Small Footprint Department Stores Could be the Next Big Thing

When it comes to retail, is small the new black? If trends among some of the biggest retailers are any indication, the answer seems to be yes. Before you dismiss the idea, hear us out. Today’s retailers are opting to think small, foregoing the “go big or go home” mindset entirely. In fact, many of our favorite retailers are shrinking, including Target, Macy’s, Nordstrom, and more. Even big-box giant retailer Walmart is experimenting with smaller concept stores. But why?

The retail industry is seeing a definite shift in big retailers’ brick and mortar stores, as they continue to experiment with different store formats and models. Smaller footprint stores are also popping up among smaller brands that have, until now, played only in the online world. So, when it comes to physical space, why the shift from big to small, or from non-existent to small? The answers vary and often aren’t simple.

Typically, the downsizing of larger, more traditional formats is done in efforts to optimize and improve productivity. As more and more business is done online, these types of stores feel that less physical square footage is necessary in order to take care of their customers. Conversely, other brands make the shift in an attempt to actually get closer to their customer base. Smaller versions of traditional store models allow brands like Target to open more stores with convenient locations.

To better understand this trend, let’s take a closer look at some of the retailers who are choosing to make this leap.

Nordstrom

This brand is no stranger to staying on top of digital and technology shifts, so it comes as no surprise that Nordstrom was among the first retailers to announce its plans to try out smaller stores and more experiential spaces for its customers. The brand unveiled its smaller concept store, Nordstrom Local, which is a smaller space that focuses on customer services rather than stocking inventory. The footprint of these stores is approximately 1/50th of the typical Nordstrom store.

Kohl’s

Sadly, this retailer is known for being among those that have struggled to navigate and stay afloat in the retail waters -- however, the brand is trying to shake things up and stay relevant. Today, the brand is in the middle of shrinking hundreds of its stores, that feature a standard footprint of around 90,000 square feet. And, in some cases, the retail brand plans to sublease the physical space that it is no longer using to other retail partners, such as niche budget grocer Aldi.

Macy’s

No stranger to the smaller store concept, Macy’s first dipped its toes into the smaller concept store waters in 2015, when it revealed the retailer’s plans for an off-price offshoot, Macy’s Backstage, with stores averaging 30,000 square feet. With its success, Macy’s CEO Jeff Gennette has revealed plans to take the concept one step further, adding more stores with an even smaller footprint (10,000 square feet, on average). Macy’s opened 30 Backstage locations in 2017 alone, and now boasts more than 50 such stores.

As consumer demands continue to shift and evolve, retailers will need to evolve alongside of them in order to keep up. Today’s retailers that understand the blend of different channels will be successful, although it’s hard to predict what these new stores will look like.