Growth of Smaller-Format Retail Stores Expected to Continue Growth Trend

ADDISON, Texas—One of the top trends in retail today is a move to smaller-store formats, with big retailers such as Target among the companies that are downsizing their store footprints in a move to be more consumer friendly, according to a recent report from the firm Koupon Media.

“E-commerce, urbanization and the shifting of consumer demands show no signs of slowing, which will inevitably lead to continued growth of [the] small format in 2018 and beyond,” the firm noted in a recent report on retailing trends. “This presents not just an opportunity for retail, but for the mobile-offer industry as a whole.”

Koupon Media, based here, is a firm that specializes in helping “marketers deliver exceptional value to their customers,” and its media platform delivers mobile offers for more than 43,000 retail locations and many of the largest consumer brands.

According to the media firm, the growth in small-format stores can be attributed to three factors: demographic shifts, the increase in online shopping and purchasing, and shifting consumer demands. “As consumers move to cities, shop online and demand convenient store trips, smaller stores are emerging as a natural fit,” the report noted.

For example, Target announced in late 2016 that it would open smaller “flexible-format” stores in urban areas, and by next year the retailer will operate 130 small-format stores, which generate about twice the sales per square foot of the traditional Target big-box locations, according to Koupon Media’s report. In addition, CVS Pharmacy last year unveiled a new format designed that was designed to create “a more convenient retail experience,” the report noted.

According to Koupon Media, small format retail categories—including drug stores and dollar-format stores—outgrew larger format stores by almost 400 percent. “Demographic shifts paired with online shopping behavior and shifting consumer demands are forcing leading retailers to think small,” the report noted.

Millennials also are a factor in driving the move to smaller, more convenient locations, according to the report. The Millennial segment tends to prioritize convenience and instant gratification, which was borne out in a recent survey that found 51 percent of the Millennial generation indicating that a store’s location is most important when deciding where to make a purchase.