Steven Dennis on Retailer’s Moving to Smaller Store Formats

August 27, 2012

Until Amazon–and a handful of other pure-play concepts–emerged as power-house brands, a retail growth strategy largely consisted of two major components: build bigger stores and create a bigger retail footprint.

Whether you were Walmart, Office Depot, Coach or Lowe’s, your strategy was mostly about pushing the limits of market dominance: expanding your assortments to cover every related purchase occasion and expanding locations to cover every trade area perceived to be viable.

Then digital happened, and if a large part of your product offering could be delivered without the need of a physical location (think Best Buy, Blockbuster or Borders–and that’s just the “B’s”) this has proved to be a big problem indeed.

And show-rooming happened, and if you were in categories where the consumer likes the research service found in a brick and mortar location, but ultimately buys on price, you were losing a lot of business to direct-to-consumer players not burdened by your overhead structure.

Then there’s the emergence of omni-channel retailing, and if you aren’t making it frictionless for your customer to shop anytime, anywhere, anyway, you were losing share to those who have truly embraced customer-centric retailing.

Last, but not least, the recession happened, and many of the consumers you were counting on–you know, the ones that had become weapons of massive consumption fueled by easy credit–suddenly pulled back big time, and many of the locations you opened in the last five years or so are dead in the water.

So for most, it’s time to shrink.

Fewer, more productive stores. New, smaller formats that resonate more strongly with today’s blended channel realities and that can work in different kinds of trade areas.

But if you think getting smaller is just about physical space, think again.

When you think smaller, think more intimate. Become more personalized, more intensely relevant. Treat different customers differently.

In the future the customer shouldn’t walk away from interacting with your brand thinking that you have down-sized. They should feel that you know them, you get them and that your brand was built with them at the center of all that you do. To read the full article please visit http://stevenpdennis.wordpress.com/.

Steven Dennis is President and Founder of SageBerry Consulting, a boutique consulting firm specializing in growth and marketing strategy for retail, luxury, and fashion brands. Prior to SageBerry, Mr. Dennis was Senior Vice President of Strategy and Marketing for The Neiman Marcus Group where he was responsible for strategic business development and corporate marketing (customer insight, enterprise marketing programs, and loyalty program strategy), and led the company’s partnership to operate its credit card business. Prior to joining Neiman’s, he was with Sears in a number of senior leadership roles including, Acting Chief Strategy Officer and Leader of the Lands’ End Integration Team. Mr. Dennis’s expertise spans all major retail and e-commerce product categories and formats. Steve will be participating in our Retail Roundtable on September 12th in New York at 2 PM Eastern. If you are interested in attending please email info@roulstonresearch.com.

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