There is a quiet shift moving across the country, as big retailers known for offering aisles and aisles of products are scaling back to provide a curated selection of goods and services.
Retail giants such as Sephora, Target, and Ikea are opening small-format stores across the country that offer goods targeted to demographics of the local market. These smaller stores also serve as a pick-up location for items customers order online.
The shift to a boutique-style store is a growing trend for 2017, according to a report by Vend, a retail management software company. The smaller stores seem to appeal to a younger shopping demographic, as they help omnichannel efforts to create smooth delivery from web portals to physical stores, and encourage faster shopping for college students and busy young professionals.
“Consumers don’t want to waste precious time wandering around the endless aisles of enormous stores anymore,” the report states. “Instead, they want ease and efficiency in the form of smaller stores with specialized selections.” Smaller footprint stores also benefit the retailer because it takes less money to open and operate a smaller store, the report notes.
In 2014, Target opened its first small-format Target Express in Minneapolis, near the University of Minnesota campus. The store is designed to appeal to urban dwellers and students with a large selection of electronics, home goods, grab-and-go food, and a pharmacy. Target opened 23 Express stores by September 2016 in major cities, including Chicago and Philadelphia, with plans to add nine more stores by the end of 2016 and at least 16 in 2017.
Target opened an Express in Rosslyn, Virginia, in 2015 just across the Key Bridge from Washington, D.C.’s Georgetown neighborhood. The 23,000-square-foot store caters to a neighborhood where the median age is 31 and most residents live in high-rise apartments, according local civic association demographics. The neighborhood lacks grocery stores, so this Target Express offers a wide selection of food, beer and wine. The store also features home goods, electronics, and exclusive designer clothing. In contrast, a Target Express in New York’s Tribeca neighborhood focuses on baby and kids merchandise to meet the needs residents there.
Instead of giant carts that shoppers can fill to the brim, Rosslyn’s Express store offers hand-held baskets and two-tiered carts designed for a quick shopping trip. There are more self-checkout locations than cashiers at this store and a pick location up online orders. The in-store pickup site helps Target to compete with Amazon, Brian Cornell, Target’s CEO, tells Bloomberg. Target plans to open two more Express stores nearby.
Sephora recently opened a boutique Sephora Studio in Boston’s upscale shopping district on Newbury Street. Studio stores will be about 2,000 square feet, which is less than half the size of a typical 5,500-square-foot Sephora store. While Sephora’s larger stores offer a sprawling array of products to try, the brand’s Studio will focus on on-demand, one-on-one services such as 45-minute makeovers, 15-minute mini facials and a 75-minute custom makeover plus. Sephora plans to open other small-format stores in similar shopping districts in the Williamsburg neighborhood of Brooklyn, Hoboken, New Jersey, and Washington, D.C.
“In today’s retail environment where very little is constant and clients’ expectations are ever-evolving, one thing has remained true for SEPHORA: there is no better way to create meaningful connections with clients than through personalized experiences and a customized approach to beauty,” says Calvin McDonald, president and CEO of SEPHORA Americas, in a statement.
IKEA also plans to open more click-and-collect locations, making these small-format stores a large part of its expansion strategy. “This is part of the total conversion of IKEA from a traditional brick-and-mortar retailer to a multichannel retailer with the stores at the heart,” said Chief Executive Peter Agnefjäll tells the Wall Street Journal.
Changing consumer preferences will encourage even more large retailers to add small-format stores to their retail mix, predicts the report by Vend.