Size matters in retail

With the recent announcement of some Best Buy stores closing and others downsizing, it appears retailers are trying to figure out what size matters.

Best Buy said Friday (March 29) it is decreasing its overall square footage with remodels in fiscal 2013. While the company plans to open 100 U.S. Best Buy Mobile small format stores it expects to close 50 of the big-box formats.

There’s no word if any Best Buy stores in Arkansas have been spared, but the criteria for closure is underperforming sales, the company said.

The Best Buy news follows other big box retailers’ already trying smaller formats.

Walmart Express test stores opened in June 2011 in Northwest Arkansas. The 15 stores average 15,000-square-feet each and offer groceries, general merchandise, fresh produce, dairy, meat, dry goods and other essentials. The stores are located in Arkansas, North Carolina and Chicago.

Walmart U.S. CEO Bill Simon said in a February earnings call, the company is still committed mainly to the big box stores, “Supercenters remain the best format to capture market share and we remain committed to growing through supercenters, as well as smaller formats.”

Walmart has said it will continue to evaluate its small store format this year.

Target’s, small-format store called CityTarget is soon to launch. The first stores are set to open in Seattle, Chicago, L.A. and New York in mid-2012 and Puerto Rico in 2013-2014. Target’s small format size is from 80,000 to 100,000 square feet.

The company stated its smaller format will offer commuters, tourists and urban dwellers the convenience of one-stop shopping with urban living essentials, on-trend fashions and exclusive designer collections.

“A hallmark of Target is our flexibility in store design, which allows us to bring high-quality products at great values to our urban guests,” said Target Executive Vice President Property Development John Griffith.

So what’s changed to create this idea of smaller is better? By no surprise, it’s the consumer.

Mobile devices have caused a shift in society where consumers are connected. This empowers them to take advantage of information from others. Nielsen recently revealed that 29% of smartphone owners used their phone for shopping with 34% read product reviews and 38% made in-store price comparisons.

Retailers can’t ignore the number of people using smartphones and must embrace multi-channel solutions because consumers have proved they want to shop anywhere, anytime, analysts said.