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Shopping Small is In

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Big one-stop shopping environments seem to be losing traction in favor of smaller footprints and formats. In the grocery sector, two major chains indicate that this shift is gaining momentum.

Outside of Boston, Ahold opened the first of its “bfresh” smaller-format stores. It combines grocery and food take-away in 10,000 square feet and shows how the blurring of lines is materializing. Its high quality food-to-go sets it apart from many of its urban-centric competitors.

Going up the New England coast, Hannaford’s has introduced a 20,000-square-foot smaller supermarket on the outskirts of Portland, Maine. In its more rural setting, this store offers fresh food, with a layout that is focused on presenting convenient meal solutions. Clever merchandising, featuring wine next to produce and deli, is working very well with this format.

Many shopping trends in Europe make their way to our shores. The smaller format is increasingly more popular there, as there is a greater inclination among European shoppers to frequent smaller stores than ever before.

Locally, more regional chains, like family-owned Roche Bros. in Massachusetts, are also entering the smaller format venue. They debuted Brothers Marketplace in Boston in 2014, which took that European concept, emphasizing high quality prepared foods, seasonal items and local products.

Even grocery giant Kroger is looking to expand into smaller urban formats. With its acquisition last year of Roundy’s, Kroger will gain access to Roundy’s banner Mariano’s Fresh Market, which has been extremely successful in the Chicago area, featuring a quality selection of fresh foods and local products.

Kroger’s CFO Mike Schlotman notes that Kroger has experimented with urban formats, but has yet to truly establish its presence within the city—something that will change, now that the company will have firsthand access to Mariano’s operations and is also retaining its namesake creator Bob Mariano to help run the chain.

Further proof that smaller formats are gaining more acceptance appeared when IRI Strategic Analytics Group released a study recently indicating that big-box retailers declined by more than 28% since 2011, paving the way for smaller store footprints.

Multichannel shopping is on the rise and while we are not seeing the end of the big, weekly family shop, shopping patterns are changing, with more regular, small and pop-up shops becoming part of the mix.

Part of the reason for this is that shoppers are also investing more time and effort in health and wellness, including a switch to more fresh food. Smaller-format stores are better suited to capitalize on this, providing they can deliver and execute on items that meet shopper expectations in terms of range, freshness, quality and pricing.

The IRI study also noted that organizing store “clusters” by shopper profiles first and geography second works extremely well—this is especially pertinent to smaller store formats, as they need to concentrate on providing high-selling items to be successful.

Target’s version of the smaller format was introduced with CityTarget and TargetExpress in 2014, but in 2015, Target announced that the formats would be rebranded, dropping the “city” and “express” parts of their names, an indication that the company is looking to further incorporate these small-format, urban concepts into its brand identity.

As Target continues to open both big-box and flexible-format stores, shoppers should increasingly associate all of the formats as just Target stores, rather than viewing them as separate entities, which shows how much weight the smaller format carries in Target’s big-picture retail strategy.  

TAGS: retail, retail trends, retailers,
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