Time for Retailers To Re-Evaluate Their Store Footprint -- One Size Does Not Fit All

May 6 2014, 12:14pm CDT | by

As digitally savvy shoppers continue to drive today’s retail environment, companies are being forced to strategically re-think their store footprint to be more relevant with these consumers. Increasingly, these important decisions have been moved into the boardroom, as real estate can be the most critical factor in a retailer’s operating and growth strategy and a key driver in unlocking value. Investors are demanding that retailers reassess their real estate to maximize their space, and we’re finding that as they do so, there is no longer a one size fits all model.

While in the past, a retailer’s needs might have consistently been a 1,500 square foot store in an “A” mall, today, there is a lot more to consider. Every retailer needs to address their real estate strategy in each of the markets they serve, and identify the right size space that makes sense for their business. This means smaller spaces for some, and larger spaces for others.

We’ve seen big box retailers like Best Buy and Staples move to smaller spaces to better serve the digitally savvy consumer, while others, such as leading men’s big and tall apparel retailer Destination XL, is catering to its customer with larger format stores to showcase its premium brand merchandise in wider aisles, with larger fitting rooms, sofas, chairs and flat-screen televisions.

Further, as demand for Michael Kors products continues to grow, it is capitalizing on its strong opportunities with aggressive expansion in the U.S., as well as in Europe and China.  Having successfully expanded beyond apparel into handbags, small leather goods, eyewear, jewelry, watches, and footwear, the renowned global lifestyle brand has been moving to larger store formats to accommodate its growing number of product categories. Constantly delivering new innovation to its customers, the brand continues to grow its global footprint.

Conversely, some retailers are redesigning their stores to occupy a smaller footprint in order to greater utilize their space. Contemporary apparel retailer Scoop, for example, has begun moving to smaller spaces to provide a more exclusive experience for its customers. With less duplicative product, and a more intimate environment, Scoop is enhancing its customer shopping experience, while lowering overhead cost and increasing sales.

We are also seeing companies re-think their footprint, as they expand with new retail concepts. In an effort to reach different segments of the population, J. Crew is speculated to be developing a new store format aimed at budget-conscious shoppers, according to a recent Wall Street Journal article. If so, you can expect the retailer will look for appropriate locations, markets, and store sizes to attract this target customer.

So how should retailers evaluate their square footage?

There are a number of factors to consider when assessing a retailer’s footprint, and each neighborhood needs to be addressed individually.  Importantly, a retailer will want to know the market potential in the given area. What is the population threshold, and could this location present further opportunities?  A retailer will also want to seek out any competition and determine if there is already oversaturation in its market niche or if it is strong enough to carry another retailer in that space. Further, who are the co-tenancies? Is the retailer’s customer already there? After a thorough evaluation, a retailer can appropriately determine its ideal square footage.

As retailers remain committed to driving shoppers back into the store, they have a lot to consider in terms of re-thinking their store footprint to align with today’s sophisticated consumers.  At the same time, rental costs have risen dramatically in the last few years as new developments have slowed, which is forcing retailers to refocus their real estate strategies to maximize square footage and sales. While this is driving some retailers to reduce their number of stores and relocate to smaller spaces, it is driving others to increase square footage and open additional stores. Clearly, there is not a one-size fits all approach. Retailers need to develop the optimal strategies in the appropriate markets, location and space that make sense for their business.

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Eel-like robotic fish to scan inaccessible ocean areas
Singapore, Nov 29 (IANS) Inspired by Anguilliform fishes due to their superior flexibility compared with other fish species, a team of scientists in Singapore developed and built a prototype of an eel-like robotic fish.
 
 
NASA's Orion all set for Dec 4 test flight
Washington, Nov 29 (IANS) Designed to carry astronauts to deep space destinations like Mars, NASA's Orion spacecraft is all set to blast off for its first test flight Dec 4.
 
 
1.1 million HIV infections in children prevented: UNICEF
United Nations, Nov 29 (IANS) An estimated 1.1 million human immunodeficiency virus (HIV) infections among children under the age of 15 have been prevented between 2005 and 2013.
 
 
Countries along Silk Road discuss co-operation
Bishkek, Nov 29 (IANS) Governmental representatives and experts from more than 10 countries exchanged their practical views in the international conference on "Common Development and Prosperity of the States along the Silk Road" held in the capital city of Kyrgyzstan.
 
 
 

Latest from the Network

Abigail Breslin slams ex Michael Clifford
Abigail Breslin has slammed her ex, Michael Clifford. The 'My Sister's Keeper' actress went on a date with the 5 Seconds of Summer guitarist last year but it seems as though it didn't end well after she released a song...
Read more on Celebrity Balla
 
Kevin Bacon to sizzle in Jungle
Kevin Bacon is to star in 'Jungle'. The 56-year-old actor will appear in the survival drama, which is based on the true story of Yossi Ghinsberg, an adventurer who found himself lost in the Amazon rainforest for three...
Read more on Movie Balla
 
Mickey Rourke to return to boxing at 62
Mickey Rourke will return to boxing aged 62. The actor will come out of retirement and step into the ring tonight (11.28.14) for the first time in 20 years as he competes against 29-year-old Elliot Seymour. He said: ''...
Read more on Celebrity Balla
 
Kristen Stewart: Actors are isolated
Kristen Stewart claims actors become ''isolated'' because of their fame. The 24-year-old actress has become one of the biggest movie stars in the world following her portrayal of Bella Swan in the 'Twilight' franchise...
Read more on Celebrity Balla
 
Burt Reynolds to sell memorabilia
Burt Reynolds is selling over 600 personal items to stave off bankruptcy. The 78-year-old Hollywood star is reportedly struggling financially so will see awards, cars and costumes go under the hammer in Las Vegas next...
Read more on Celebrity Balla
 
Eddie Redmayne's fear of failure
Eddie Redmayne has a fear of failure. The 'Theory of Everything' star has admitted that like fellow actor, Rachel Weisz, he worries about ever getting hired again. He said: ''I was reading an interview with Rachel Weisz...
Read more on Celebrity Balla
 
Where to Find Black Friday Car Deals
The Black Friday Car Sales events have gained traction over the past couple of years. This year several major brands ran nation-wide commercials announcing their Car Black Friday deals. In the beginning it was creative...
Read more on Auto Balla
 
Indian Aces win inaugural IPTL tie
Manila, Nov 28 (IANS) The much-awaited inaugural International Premier Tennis League (IPTL) got off to a flying start with the Indian Aces notching an impressive 26-16 first victory against the Singapore Slammers at...
Read more on Sport Balla
 
Australian navy's largest ship commissioned
Canberra, Nov 28 (IANS) HMAS Canberra, a 27,000-tonne landing helicopter dock (LHD), was commissioned Friday, providing the Royal Australian Navy (RAN) with one of the world's most capable and sophisticated amphibious...
Read more on Politics Balla
 
Sindhu, Prannoy enter Macau Open semis
Macau, Nov 28 (IANS) Indian shuttlers P.V. Sindhu and H.S. Prannoy came out with contrasting wins to enter their respective semi-finals at the $120,000 Macau Open Grand Prix Gold here Friday. While defending champion...
Read more on Sport Balla