Can the small store really work and is it here to stay?
There is no doubt that small stores are a growing trend in the North American retail market. Dollar stores and traditional big box stores alike are rushing to roll out more small footprint stores. While there are some key drivers behind why consumers are shopping at smaller stores, there is no guarantee that all retailers can master the smaller format and roll them out nationwide. The art of running the small store is still a work in progress, but there are some obstacles and opportunities that will have a major impact on the success of the format.
One of the challenges of the small store is that most retailers’ systems and processes are currently designed to serve big stores. Retailers are accustomed to:
- having big back rooms for inventory
- a lot of people to stock shelves
- Ample space in-store to offer a huge assortment.
In a small store, all of these factors change and it forces retailers to adapt their model if they want to make these stores sustainable and productive in the long term.
Despite the obstacles, small stores can be a very effective method of reaching shoppers. It is far easier to “customize” a small store to a specific area or to a specific shopper group. A small store that has a limited trading radius can quantify its core shopper and design the store for that individual, increasing sales and loyalty. For example, the same retailer may have very products and schedules for a Hispanic population, a Muslim community, a rural southern town, and a tourist destination.
The operation of the small store is a complicated process and is fundamentally different from the big store of the 20th century. Almost every aspect of the store will have to be reevaluated and altered. While that may be frustrating to some consumers and corporations alike, it is a product of the consumer environment in which we live. As shoppers, we are becoming increasingly diverse each day, with different demands and habits that require equally diverse types of stores. The small store is the product of an ever-changing and progressively varying marketplace in its early stages of development, and that development will drive much of the North American retail growth of the future.