|
Up
| |
Smaller is better for bigger companies
by Rich Timlen
In retail, size apparently does matter. But
instead of building massive supercenters, companies are now opting to open
shrunken versions of their stores.
While Wal*Mart has been developing its “Neighborhood Market” concept for some
time, other companies like Home Depot, Best Buy, Sports Authority and Staples
are now stepping up their efforts to make more customer-friendly locations with
smaller square footage, less crowded aisles and quicker checkouts. So instead of
navigating 200,000 sq.ft. megastores, shoppers can instead zip through 40,000
sq.ft. smaller-concept markets.
Home Depot, which typically operates stores between 80,000 to 140,000 sq.ft.,
has been experimenting with a 40,000 sq.ft. “Villager Hardware” store. This
mini-me version features a mix of hardware and home decor, but doesn’t have
larger items such as lumber and floor coverings. The first store opened at the
site of a former Rickel in East Brunswick, NJ and includes 37,000 products,
about half of which are available at a typical store. A second smaller-concept
store will open in Garwood, NJ later this year, with two additional locations
planned for the state. The company will then wait to see the performance of the
NJ sites before beginning a national rollout.
The Wal*Mart “Neighborhood Market” stores first opened during 1998 in
Bentonville, AR, site of the company’s home office. Since then, the national
discounter has opened 35 more of the smaller stores, including 10 this January.
The recent openings included five in TX, two in AL and one each in FL, OK and
UT. These stores are typically 40,000 sq.ft. to 50,000 sq.ft. and are designed
for shoppers who live between Wal*Mart Supercenters. The stores offer food
items, as well as health and beauty aids, stationery, pet products, cosmetics
and household chemicals, and also include a drive-thru pharmacy.
Electronics giant Best Buy has been looking to expand its stores, which
typically range around 45,000 sq.ft. But to continue a steady growth, the
company is looking to develop stores that are two thirds that size for smaller
towns. The changes in the 30,000 sq.ft. “small market” Best Buy stores aren’t
very noticeable. The newly opened location in Newington, CT has seven racks of
CDS instead of the usual 12 and the appliance department has limited sizes and
colors. The company is now even looking to pare its store size down to 20,000
sq.ft. for even smaller communities. Overall, the company plans on operating 200
small-format stores.
The Sports Authority recently opened 25,000 sq.ft. prototype stores in Ocala and
Panama City, FL. The new stores offer customers the ability to navigate the
store aided by the use of overhead department signs that are color coded to the
tops of gondolas. The overall layout and merchandising, however, is consistent
with the existing Sports Authority stores.
Staples, which operates 20,000 sq.ft. superstores worldwide, has been opening
smaller format stores in densely populated urban areas such as Manhattan and San
Francisco called “Staples Express.” The company also opened the industry’s first
airport location in Philadelphia during 1999 and operates airport stores in
Boston, Newark and Pittsburgh.
The main reason for companies to open smaller versions of their stores is to
gain an edge in secondary markets. Another reason is simply that there isn’t
enough top-tier real estate opportunities available, with many spaces exhausted
already by big box users.
Another major retailer trying the smaller-concept store is Toys “R” Us. But the
toy giant is shrinking for other reasons, namely declining sales. The company
has spent $600,000 per store to make their locations more compact. More than
half of its 703 stores have been converted.
But while the smaller-concept store may be the hot trend, other companies are
actually going the other way and increasing the square footage of their
locations. Jo-Ann Stores, Inc., a national fabric and craft retailer, operates
889 traditional stores averaging 14,300 square feet in 49 states, but also has
opened 70 Jo-Ann superstores, a 46,000-square-foot monster, throughout 16
states.
The TJX Cos. have also been combining HomeGoods stores with a T.J.Maxx or
Marshalls store in a superstore format called T.J.Maxx ‘N More or Marshalls
Mega-Stores. The company currently operates 36 superstores and plans on opening
even more.
For more information regarding Wal*Mart, contact Wal*Mart Stores, Inc., 2001
10th Street, Bentonville, AR 72716; 479-273-8446. For more information regarding
Home Depot, contact The Home Depot, Inc., 2455 Paces Ferry Road, Atlanta, GA
30339; 770-433-8211. For more information regarding Best Buy, contact Best Buy,
Inc. PO Box 9312, Minneapolis, MN 55440-9312; 952-947-2000. For more information
regarding The Sports Authority, contact The Sports Authority, Inc., 3383 North
State Road 7, Fort Lauderdale, FL 33319; 954-735-1701. For more information
regarding Staples, contact Paul Capelli, Staples, Inc., 500 Staples Drive,
Framingham, MA 01702; 508-253-8530; Email: paul.capelli@staples.com. For more
information regarding Toys “R” Us, contact Toys “R” Us, Inc., 461 From Road,
Paramus, NJ 07652; 201-262-7800. For more information regarding Jo-Ann Stores,
contact Jo-Ann Stores, Inc., 5555 Darrow Road, Hudson, OH 44236; 330-656-2600,
Fax 330-463-6675. For more information regarding HomeGoods, T.J. Maxx or
Marshalls, contact The TJX Cos., 770 Cochituate Road, Framingham, MA 01701;
308-390-1000, Fax 508-390-2828.
|