Published:
Although overall retail spending has continued to grow, factors such as e-commerce and an abundance of shopping malls are changing the way people shop. Today, e-commerce sales are steadily increasing, with Amazon sales rising from $16 billion to $80 billion between 2010 and 2016, and nearly half of all United States households are now Amazon Prime subscribers. Also, according to Cowen and Company’s research analysts, between 1970 and 2015 the number of shopping malls in the United States grew more than twice as fast as the population.
Because of this, many retailers are choosing to close or downsize many of their store locations. For example, Sears recently reopened its location at Fair Oaks Mall in Northern Virginia and the space was half the size of the original store. In order to accomplish this, Sears had to dramatically decrease the size of all of its departments and created a single check out counter. For Sears, maintaining full sized locations may not be profitable considering the company has not posted an annual profit since 2010. Stores such as Walmart, Target, Macy’s, and Nordstrom are also following suit and transitioning to smaller locations. While sales from retail stores are expected to grow 0.8% annually until 2022, smaller retail stores are expected to grow 3.9% annually. Also, retail stores that are smaller than 20,000 square feet are expected to grow 21% from $612 billionAlthough overall retail spending has continued to grow, factors such as e-commerce and an abundance of shopping malls are changing the way people shop. Today, e-commerce sales are steadily increasing, with Amazon sales rising from $16 billion to $80 billion between 2010 and 2016, and nearly half of all United States households are now Amazon Prime subscribers. Also, according to Cowen and Company’s research analysts, between 1970 and 2015 the number of shopping malls in the United States grew more than twice as fast as the population. Because of this, many retailers are choosing to close or downsize many of their store locations. For example, Sears recently reopened its location at Fair Oaks Mall in Northern Virginia and the space was half the size of the original store. In order to accomplish this, Sears had to dramatically decrease the size of all of its departments, and created a single check out counter. For Sears, maintaining full sized locations may not be profitable considering the company has not posted an annual profit since 2010. Stores such as Walmart, Target, Macy’s, and Nordstrom are also following suit and transitioning to smaller locations. While sales from retail stores are expected to grow 0.8% annually until 2022, smaller retail stores are expected to grow 3.9% annually. Also, retail stores that are smaller than 20,000 square feet are expected to grow 21% from $612 billion between now and 2022. Other incentives for companies to downsize their retail stores are that it allows them to open stores in urban areas with much higher rents, such as Target’s urban strategy, and it allows them to provide more specialized and targeted products, such as Sephora’s new studio. Target is currently opening 30 smaller formatted stores, with a specific focus in urban areas and on college campuses. Opening smaller stores allows for more convenient locations for the millennial generation. Small, urban locations allow for consumers who do not own a car and for quick and easy shopping. There are many reasons for companies to downsize their current retail stores in today’s economy, however it is not easy. Last year, Walmart closed all Walmart Express stores and stopped with its current plans for smaller formatted stores." target="_blank"> between now and 2022.
Other incentives for companies to downsize their retail stores are that it allows them to open stores in urban areas with much higher rents, such as Target’s urban strategy, and it allows them to provide more specialized and targeted products, such as Sephora’s new studio. Target is currently opening 30 smaller formatted stores, with a specific focus in urban areas and on college campuses. Opening smaller stores allows for more convenient locations for the millennial generation. Small, urban locations allow for consumers who do not own a car and for quick and easy shopping. There are many reasons for companies to downsize their current retail stores in today’s economy, however, it is not easy. Last year, Walmart closed all Walmart Express stores and stopped with its current plans for smaller formatted stores.
File under
Share this article
