The Washington Post writes that “two of the biggest names in big-box retail have boosted their bets on a growing trend for brick-and-mortar sales: smaller stores.
“Best Buy and Macy’s this week announced plans to add small-format stores in a strategy that could help the companies cut costs while answering customers’ demand for convenience. They join Nordstrom, Target, Kohl’s and other national chains in scaling back their locations with tens of thousands of square feet anchoring malls and shopping centers, while focusing on more compact and efficient stores.”
Some context from the Post story:
“Small-format stores address a modern shopping experience, one very different from the days before e-commerce, Boni said. Consumers are no longer discovering products by browsing through 100,000-square-foot stores — they’re doing it on social media as well as on the brands’ apps and websites.
“For example, Nordstrom is slowly growing Nordstrom Local, a store primarily focused on services including alterations, pickups and returns. In 2022, Kohl’s announced that it was adding 100 small-format stores that are about 35,000 square feet in size. Furniture retailer Ikea has at least 26 mini stores, including ones just for picking up orders and others to that resemble a showroom called ‘Plan & Order.’
“The most recent example is Best Buy, which said Thursday that it will open small-format locations in new markets and downsize in existing ones, though didn’t specify where or how many.
“That announcement came two days after Macy’s said it would close 150 namesake locations to focus on small-format stores under its Bloomingdale’s and Bluemercury brands.”
KC’s View:
As I’ve said here before, I’m a big fan of companies that operate multiple formats – staying within their spheres of expertise, but finding new ways and places to communicate their value proposition to shoppers. (I talked about this last week when referencing a new format being operated by Newport Avenue Market in bend, Oregon.)
In the case of big box stores, it seems to especially make sense. Treasure hunts are fine, but so many of them now are conducted online that it makes sense to be more surgical about how and where one offers them. Sometimes. a big box makes sense (especially if it is differentiated in meaningful ways), but sometimes it makes sense to boil it down to specific, relevant and resonant elements. Nordstrom Local is a favorite concept of mine, though the company has shown a lot of discipline in how it rolls out the format. And I think Ikea also has done a n ice job.
However, it is not like the electronics segment hasn’t done this before. You’re going to have to help me on this one, because it happened so long ago and I haven’t been able to find any references online. But there was some electronics retailer (it may have been Best Buy, but also could’ve been Circuit City) that decided to test an upscale boutique format in Chicago. It didn’t work, but that may have been a matter of timing. It also may have been a matter of curating the wrong selection.
Doesn’t mean it wasn’t a good idea, and especially one that’s time may have come.
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