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THE INCREDIBLE SHRINKING STORE
1 May 2016

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THE INCREDIBLE SHRINKING STORE

There’s a trend towards miniaturisation going on in retail.

At the more extreme end of the scale, I recently spotted a tiny shop in Rome selling Manchester- complete with a window display of miniature made-up beds. It’s a highly engaging and smart use of a retail space the size of a walk-in wardrobe.

In Singapore, miniaturisation affects whole malls. Bugis Junction is almost claustrophobic, as it crams hundreds of tiny stores into a warren of narrow passages and galleries. It doesn’t seem to put the crowds off, and the place is crammed with enthusiastic Singaporeans mostly under the age of twenty five. The retailers seem to be mainly local, with few of the international names that you’d find in the neighbouring Bugis+. The concentration on local is a welcome change from the growing trend of homogeneity in shopping malls, and more, smaller lease spaces makes the offer accessible to smaller businesses.

Shrinking stores are a phenomenon we are seeing in supermarket retail. Over the last couple of years, Tesco has reduced the average size of its larger stores, in some cases sub leasing the space to other retailers. This goes hand in hand with reducing the amount of choice it gives in its ranges. In 2014, Tesco was stocking a bewildering range of 28 tomato ketchups and an overwhelming 228 SKUs of air freshener. The combination of over-innovation from suppliers and cash payments to the retailer for listing these new products had blown the ranges out to where it was not only confusing to shoppers but difficult to maintain availability and keep prices down.

By comparison, Aldi has just one tomato ketchup in one size. Its minimal amount of SKUs is one reason why shopping at smaller stores like Aldi and Lidl is simpler and cheaper.

But the talk of the Australian supermarket scene is the push to much, much smaller formats. Woolworths has just opened their smallest ever store on York Street Sydney, a diminutive 310 square metres. At this size the line between supermarket and convenience store starts to blur. You certainly can’t call a shop this small a supermarket, but it’s clearly not a convenience store as we know it. A convenience store will tend to focus on fast food, soft drinks, tobacco, confectionery and “emergency” items, and have a generic range of merchandise. A small format supermarket tends to focus more on fresh food with a range of prepared meals and a general emphasis on healthier eating. If Woolworths’ latest Surry Hills store is anything to go by, the offer will be carefully tailored to fit the local customer base. There simply isn’t room for anything that’s irrelevant to that customer.

French supermarket chain Monoprix has developed an inner city brand called Monop’ (average size 290 sqm) and an even smaller, food-only Daily Monop’ (120sqm.) Interestingly, in some stores, there is a space where customers can heat up their prepared food and enjoy it in store, presumably with an accompanying “petit verre de vin.” This feature is added in recognition of the fact that many Parisian apartments don’t have a kitchen. Localisation like this is vital to this type of offer.

I believe that this model, when it’s refined and fully evolved, will eventually take over from large supermarkets. Shopping for commodities like toilet paper and dog food is becoming increasingly automated. The logical outcome is that basics will be bought online from aggregators, be delivered directly from a distribution centre and just turn up in the appropriate places in our homes. Our shopping habits are already evolving into smaller, more frequent baskets. As we become more conscious of waste and more particular about freshness and the convenience of healthy prepared food, this pattern will only increase and lead to smaller, conveniently located mini supermarkets closely geared to their local populations.

As online channels continue to become more sophisticated, it’s natural that every category of store will tend to shrink- and so will shopping malls. Driverless technology will lead to fewer car parking spaces. And separation of fulfillment methods from the actual purchase will mean a reduction in stockholding. Same day delivery will mean that fashion stores need only carry one size of each garment. Fashion retailer Bonobos already does this. Shoe retailer Jack Erwin has no inventory in store, only try-on pairs. That’s a reduction of about 30% of the space requirement for that category.

Reducing the footprint of the store is tempting, given the cost of retail rents. But that just leads to a smaller version of the same thing. Stores are no longer about buying product. It’s easier and easier to do that online. What customers now crave, and will pay for, is experience. What about using that freed-up space to create a real retail experience, something that customers will come to because they want to, not because they have to?

 

 

Gary McCartney is the owner of McCartney Design.
Integrated design- beautifully simple! 

1 May 2016
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