The Wall Street Journal has a story about how “the average store size in the U.S. is the smallest it’s been in at least 17 years, reflecting profound changes in the way Americans now shop.”
Here’s how the Journal makes the case:
“The rise in e-commerce and a growing distaste for giant emporiums are softening demand for department stores and other big-box space. Restaurants and coffee shops, meanwhile, are gobbling up small storefronts as Americans spend more time dining out, ordering at drive-throughs or using food-delivery apps.
“The end result: Retailers signed leases averaging 3,200 square feet during the first three quarters of 2023, the smallest size since data firm CoStar Group began tracking this metric in 2006.”
And:
“Rather than filling sprawling department stores with an array of merchandise, many retailers have started using data from online orders, social-media and foot-traffic analytics to customize smaller inventories to the local population. They have also bolstered store infrastructure to make it easier for customers to pick up and return items bought online.
“This allows them to keep fewer items in stores and shrink their footprints to fit into the open-air shopping centers where customers are increasingly shopping … As online shopping has grown, less store space is being used to sell basic retail commodities like socks and toothpaste. E-commerce now accounts for about 15% of all retail sales, up from just over 6% in 2014, according to the Commerce Department.”
KC’s View:
No question that the changes wrought by e-commerce have had an impact on store size in a variety of segments.
But there also may be something else at play – the aging of the US population.
I know that as I get older, the appeal of walking through a big store is diminished. I’m perfectly capable physically, but I just don’t want to waste the time and deal with all the stuff that is not relevant or appealing to me. I’m more targeted as a shopper, so I want a shopping experience that is more targeted.
Both e-commerce and smaller stores are providing people of all ages with more focused customer experiences, which I think will create greater pressure on retailers to use their data in smart ways to sharpen their offerings.
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