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The Shrinking Big Box Store

09/10/2014
Strategic Retail Group, retail trends blog

The term “Big Box” says it all when referencing these large sized category-killing retailers.  Large operators that offer a variety of goods from clothing to office supplies, to electronics and groceries all under one big roof. Previously consumers may have wanted a one-stop shop, but in todays retail world these Big Boxes are getting smaller and more efficient with their space utilization.

Profitability is key. While e-commerce continues to grow its platform, Big Box retailers have to find ways to not only compete in the Internet sales arena but also need to continue to be relevant and efficient with brick and mortar storefronts. Thus, the requirement to modify store formats is born and Big Boxes reinvent themselves by downsizing operations and in some cases opening smaller satellite locations.

As an example, Best Buy has developed a smaller concept called Best Buy Mobile.These smaller concept stores really specialize in the cell phone, tablet, and technology accessory market that is popular with consumers today, while the larger Best Buy stores continue to evolve in search of finding the right balance needed to thrive as an electronics store.

OfficeMax and Staples are examples of Big Box retailers that no longer need to have 23,000-25,000 square foot stores and can be more productive in smaller sizes.  In the pursuit of efficiency and greater profitability, these retailers have downsized to 10,000-12,000 square feet, approximately half their original size. This new size lessens the burden of having to stock more merchandise and reduces the rent obligation and should allow an increase in profitability. 

Other retailers following suit with smaller formats are ACE Hardware with their ACE Express concept, which is only 5,000 square feet in size. Sears also has smaller sized formats and Cabela’s is planning 40,000-50,000 square foot locations called Outpost Stores even though they have traditionally been 250,000 square foot behemoths around the country.

Still, some Retailers do like their large size and are trying out “store within a store” concepts to maximize sales in their large spaces.Target in some states and locations have developed small Apple Stores within their Big Box stores. Target has also partnered with Pret A Manager, offering preservative free food as their store within a store concept. JC Penny is another retailer that’s modifying its strategy as a Big Box and shifting towards a store within a store concept. By creating mini shops within the JC Penny locations, they are creating a more personalized shopping experience for consumers to improve the frequency of consumer visits.

Retail is a competitive game. Smaller, more efficient operations, coupled with a strong Internet sales presence are the key for long-term profits and sustainability. Many more Big Box retailers will start moving to smaller store fronts and we will see that landscape continue to change over time as the retail shopping world evolves.

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By: Jason Fessinger

Partner, Strategic Retail Group

Phone: 602-778-3833

Email Jason: jasonf@srgaz.com

More From Strategic Retail Group:

Why Brick & Mortar Retail is Not Dead…

Power Centers Leading the Retail Comeback

 

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