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Large-format retailers embrace small space

Tuesday, October 14th, 2008

As big-box retailers like Walmart and Whole Foods grow in size – some stores exceeding 200,000 square feet and carrying more than 60,000 products – an opposite effect is developing nationwide: small-footprint stores that offer a quicker shopping experience.

A recent New York Times article indicates that shoppers’ priorities change depending on the shopping occasion: when value is an issue, we tend to travel further and spend more time shopping in larger stores; but when time and convenience are an issue, we travel less far and want the experience to be as brief as possible. As everyone knows, you don’t drive to Walmart if you only need milk for cereal.

Safeway has been pioneering convenience formats, such as smaller-formats stores in Southern California and an experimental format, located in Denver, with a built-in convenience section. Giant Eagle opened Giant Eagle Express in suburban Pittsburgh that is about one-sixth the size of a traditional location. Whole Foods is building smaller format stores and also converting former Wild Oats locations into Whole Foods Neighborhood Market locations like the one pictured below. While these smaller formats lack the great variety offered in a large-format store, not to mention pizza ovens, sushi counters and burrito bars, shoppers appreciate that they can stock up on basics and enjoy the same prices and promotions offered by larger locations – in a visit lasting fewer than 20 minutes.

One key reason big grocery is experimenting with these formats is to mitigate the threat posted by Tesco, whose format in the United States is 10,000-square-foot Fresh andamp; Easy Markets designed to take a bite out of larger format grocery stores. What makes Tesco unique is that the selection is “edited”: rather than be comprehensive, store buyers choose a small number of high-quality products in each category. And unlike the corner grocer we grew up with, Fresh andamp; Easy Markets are engineered for maximum consumer experience.

Will the trend expand to other categories? It’s safe to assume that progressive retailers are willing to experiment with new formats based on local shopper trends. A recent ShopperCulture post described Target’s Bullseye Bodega concept in Manhattan. What’s next: a Best Buy corner store?

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