What’s up with retail downsizing?

Rendering of U District Target
Target and other large retailers are making plans to implement smaller stores built for efficiency, while others are shrinking their retail space to encourage more and faster customer visits. Photo: Target

Several large retailers are thinking small when it comes to expanding their businesses and promoting sales efficiency, especially within urban neighborhoods.

Target has announced that it will build three urban-style stores by 2020 in Bellevue, the University District and Ballard. These locations will allow the company to meet the needs of more local communities, while using the reduced square footage to maximize its productivity.

Target isn’t the only one downsizing – smaller stores are being rolled out by other large retailers including Macy’s, Nordstrom, WalMart, Kohl’s and Lord & Taylor.

Another option that has seen some success involves remodeling existing stores and shrinking retail space to accommodate better guest turnover.

Renée Sunde, President/CEO of the Washington Retail Association, told participants at a recent International Council of Shopping Centers national conference in Las Vegas that downsizing is the new trend among big box retailers, which allows them to “position themselves in hubs for commerce and community.”

Most of these smaller stores will be between 20,000 and 40,000 square feet, where an average large retail store might cover 145,000 square feet.

“It allows them to move into untapped markets that cater more to the local clientele better supporting neighborhoods and urban communities,” said Sunde. “The smaller stores are performing well, producing twice the sales per square foot as regular stores, and supporting e-commerce by serving as convenient pick-up points for online orders.”

Not all retailers are going this route, she added. Some are remodeling to reduce their space and are leasing out the empty space to encourage increased foot traffic.

Target is one large retailer who has seen great success with downsizing since it opened its first smaller-scale store in Seattle in 2012. Two years later, the company implemented an even smaller version of that format which is what will be opened across the U.S over the next few years.

Customers will be able to use the Target app to find items in store, schedule deliveries and use their mobile devices to pay for items.

Last year, Target built 30 smaller stores and the company is planning to continue the trend for a few years, according to Jacqueline DeBuse, a Target spokesperson.

“These have a really flexible design and allow us to go to neighborhoods or urban areas where a traditional-sized Target wouldn’t fit and allow us to reach new guests,” DeBuse told Lens.

Target will continue opening normal-sized stores if the situation arises, however DeBuse said the company’s primary growth will be focused on installing the smaller versions in neighborhoods or communities Target couldn’t serve in the past.

“Our team works hard to understand the local community and build an assortment of products to fit their needs and preferences,” said DeBuse.

For example, the Target in the U District will likely feature dorm decorations or other products designed for college life.

She added that Target understands that guests might leave the store on foot or use public transit in urban areas, so those stores would carry smaller quantity packs of paper towels, for instance.

“These stores do really well,” DeBuse told Lens. “They not only offer a really relevant and tailored experience for our guests, it also is a great operation at the same time.”

Both the Ballard and University District Targets will open in 2019 and will have openings for 50 team members each. The Bellevue store will open in 2020 and will employ 125 team members.

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