Small Space, Big Impact: Why Retailers Are Downsizing Physical Stores
By Bobbi Leach, FuturePay
We’ve heard it all before: “brick-and-mortar is dying.” But retailers are flipping the script on finding value in their physical store locations. Retailers are working to get the most out of their stores rather than just closing up shop. In urban settings in particular, where it’s costly to open and manage full-size locations, retailers are opting for smaller spaces that offer a more intimate customer experience and significant cost-savings.
Following others like Target and Abercrombie, Sephora is the latest retailer to begin opening modest, 2,000-square-foot locations — less than half the size of an average store. Sephora’s new stand-alone locations will feature more in-house digital components that are optimized for a smaller physical space.
Not only can smaller stores boost the customer experience, they also serve as ideal testing grounds for new technologies and services — such as new payment options or omnichannel offerings. In addition, retailers are using downsized physical stores to experiment with a wider variety of products before introducing them to a larger market.
Bigger Isn’t Always Better
Shoppers often turn to e-Commerce for a convenient, personalized shopping experience that doesn’t require wandering through a store looking for a specific item. And with a growing number of e-Tailers as well as decreasing shipping prices, online shopping just makes sense for the modern consumer.
But when customers do choose to leave their houses to shop, it’s for the benefits they can only receive in-store — which is why brick-and-mortar retailers have to brand themselves with those unique factors in mind. In smaller shops, employees can provider higher-quality service, and shoppers don’t have to worry about the hassle of long checkout lines or an overwhelming number of aisles.
Reduced brick-and-mortar footprints open the door to more personalized interactions, which may significantly pay off in the long run: 78% of customers say they have bailed on a transaction because of a bad customer service experience — making the commitment to meaningful customer service pivotal, especially in smaller retail environments.
Customer service can be the differentiating factor between larger retail stores that are diminishing — like Sears, Best Buy and Lowes — and smaller brick-and-mortar stores and retail pop-ups that are thriving. These smaller-scale retail areas, which are typically open for a limited time, offer exclusive access to a retailer’s offerings and can quickly result in more engaged shoppers and increased online sales. According to The Lion’esque Group, one international foods and goods marketplace increased its e-Commerce traffic by 300% through pop-up shops.
Despite the popular rhetoric, e-Commerce isn’t killing brick-and-mortar. It’s simply transforming the way retailers approach their physical locations. With the ability to increase customer engagement and showcase a different side of the shopping experience, less spacious stores may soon become a mainstay in the retail landscape.
Bobbi Leach is the CEO of FuturePay, an e-Commerce financing solution for the omnichannel shopper. FuturePay’s buy now, pay later option benefits businesses and consumers alike by offering shoppers instant credit while shopping online or on mobile devices.