Let’s face it; today there is a lot of competition for customers. There is no magic solution to beat your competition, but you can get the upper hand by acting swiftly and taking advantage of shifting consumer attitudes and spending habits. That’s where small format stores (SFS) come in. Here are our 7 benefits of small format stores and why we think many brands should start to think bigger is not always necessarily better!
1 - Lower rent, more stores
Rent is one of the major overhead costs of operating a store. With consumer behaviour changing and with the increase in omnichannel shopping, sometimes having a large store stocking ‘everything’ isn’t required or sensible. Having smaller hubs which are more ideally placed can save you money.
2 - Lower Overheads
Operating a smaller store needs fewer workers, lower energy bills and more efficient stock control. Spending less money in the first place helps you keep costs down for consumers.
3 - Hyperlocal Marketing
Having multiple small-format stores in different locations and catering to the specific needs of local clientele offers brands the opportunity to dive deep into the needs of each market. Stores do not need to stock the same products and instead may be stocked with merchandise that sells well in that specific area. An example would be placing more stationary supplies near universities or personal care products near gyms.
4 - Customised Services
Brands familiar with the needs of the area allow them to customize their services accordingly. For example, stores in an area where people typically return home late from work may choose to stay open for longer at night or open 24 hours for shift workers. They could also specialise in certain products that reflect the communities in the area, for example, an area with a higher percentage of young families would need different products compared to an area near an elderly residential home. They could make their stores more popular and encourages repeat purchases.
5 - Convenient Shopping
With a change in shopping habits and the increase in digital avenues to shop and purchase there is a decrease in the footfall within large stores. There has on average been a shift to consumers conducting smaller purchases more often, with more specificity and more locally. Alongside the influx of Self-service, Scan & Go, and Click & Collect technology suggests more people would prefer a quicker and more efficient experience small format solution.
6 - Improved Accessibility
For time-conscious young professionals and families, large format stores often require more planning, travelling and time to dedicate. Due to small price disparities sometimes the cost isn’t always justified for these journeys versus staying local. Small format stores are set up in strategic locations around residential areas. This makes it easier for people to stop by the store on their way back home from work and pick up whatever they need.
7 - Tech-led omnichannel Experience
A smaller store does not mean that the brand reduces its product offerings. With the right technology installed, it expands on the services it can provide. Rather than stock everything on the shelves, the store work in tandem with the e-commerce website. Small stores function as regular stores as well as pick-up and return points for orders placed online. This gives the brand a competitive edge over retailers who follow a 100% online e-commerce system. Interestingly, it has been noted that when an offline store is closed, online sales often dip. Having small-format stores lets retailers maintain their geographical presence and thus, keeps the brand visible not just on the web but in real life as well.
With their increased popularity it seems SFS are here to stay. But what’s interesting is how some retailers are favouring these formats as their standard and how this can provide a quality experience substitute for ones that have been undermined by the growth of online sales. This can be seen especially where the behaviour change has hit hardest, local high street shopping.
With the future of retail and hospitality still facing major transformation, it will be interesting to see what technology transforms next.