From mega malls riddled with vacancies and empty anchor tenant spaces, to standalone giant stores in need of a refresh, to the realm of altered consumer expectations and COVID-fueled shopping behaviors, it wouldn’t be overstated to say the retail industry is going through something right now.
While much has been said about the push of new dollar stores that dot the landscape and account for the majority of new store openings, a second retail real estate overhaul is emerging alongside one that could potentially eclipse the rising tide of discounters.
Specifically, the adoption of the trend of smaller and smarter stores of the future is underway, and it has benefits for consumers and retailers.
“We’re seeing this amazing experience where new store openings are outpacing store closings (and) we’re seeing new formats that are highly digitized, with a smaller footprint,” the National Retail Federation said. tweeted Monday (April 4), citing a podcast appearance by Anjee Solanki, US retail manager at Colliers.
Not only is the rise of “non-traditional retail” happening, the NRF said, but it’s happening in a more welcoming and experiential way.
“Retail that engages all five senses,” Solanki told NRF, highlighting the creation of memorable moments and connections that she called “the sixth sense of a retail experience.”
These industry comments and observations come at a time when a growing number of retail brands aren’t just talking about changing brick-and-mortar retail, they’re also walking the walk.
“We are reimagining our stores for the future, [and] turning them into ubiquitous design hubs and processing hubs,” Laura Alber, CEO of Williams-Sonoma, told investors last month, noting that digital already accounts for 70% of its business.
“Our [544 physical] the stores are a competitive advantage that supports the growth of our e-commerce [as] omnichannel customers spend 4x more and 3x more frequently than single-channel customers,” added Williams-Sonoma CFO Julie Whalen, noting the huge financial incentives that are built into the commercial real estate shake-up.
In fact, this shift in mindset about merchandising and the future of retail was touted as magic transcending the mass of inventory, by former Club Monaco CEO Francis Pierrel in an interview with Karen Webster of PYMNTS in November.
The 30-year industry veteran envisioned a new store model where checkout is fast and transparent, but everything else is slow, deliberate and consultative.
“It’s all about experience,” said Pierrel. “It’s like if you put Chanel N°5 in a plastic bottle, you lose the magic. It’s about the bottle. This is the packaging. It’s all about experience,” he said, describing a process that is both healing and collaborative.
Tiny Targets, Mini Macy’s
Admittedly, this petty way of thinking is still emerging but is not a new concept. That said, the process of converting a physical footprint involving 1,000+ locations and leases into something new and different is not something that can happen overnight.
Big names already embracing the Go Small movement include Target, which has made no secret of plans to open more Tiny Targets. In fact, 96% of the new locations it opened last year were part of its small store strategy that places small, organized stores in urban neighborhoods and on college campuses.
Compared to its regular department stores, Target’s smaller, pedestrian-friendly locations are only 13,000 square feet, but operate on average about three times that size.
Macy’s is another big player in the store that likes the idea of small locations, as a way to get closer to customers but also to more easily meet different needs, like in-store pickup and returns.
It’s a change the company called in January the “next evolution” of brick-and-mortar stores, which will see the opening of new locations the size of a typical CVS.
“We are incredibly excited about the growth potential of the new stores we are seeing in malls. [stores]said Macy’s chief financial officer Adrian Mitchell. “[A store] i.e. in the neighborhoods and malls closest to where the customer lives, where the football game is, where the job is, where the grocery store is, [that] is the next evolution of our physical footprint.