The Smaller the Better

Much has been made of UK-based grocer Tesco’s expansion into the US, in part because its 15,000-sf footprint allows the chain to expand rapidly in spaces too small for other grocers. This article discusses how many major domestic chains like Wal-Mart and Safeway are following suit.

We particularly love this quote, by supermarket consultant Willard Bishop: “If you’ve got 50 feet of ketchup and what you want is Hunt’s 64-ounce and you can’t find it, people get overwhelmed.”

What we might have liked even more, though, is the name of one of the shoppers they tracked down to comment in the story – Dusty McDonald. It just has a particular ring to it…

Anyway, will these smaller stores gain popularity on the mega supermarkets many are used to, and if so, what kind of impact would that have on landlords if major chains decide to downsize?


7 Responses to “The Smaller the Better”

  1. 1 Chris Boring September 12, 2008 at 9:12 am

    I think this is part of a bigger trend, the rise of the editor. Modern life is overwhelming. We’re looking for people, in this case, merchandisers/buyers, that can simplify things. Just give me 2 or 3 good choices, so I can get on with my busy life.

  2. 2 Patrick Brennan September 12, 2008 at 3:00 pm

    Small can be successful because of the way we now treat information and use it for planning purposes. More complex networks of smaller outlets can become workable for the consumer because that consumer can more easily pre-shop and make the most of a quick trip to the grocery store.

    Since most daily purchases are driven by either an impulse or a few basic needs, why waste the time trying to navigate through a larger retail space with more bottle-necked checkout lines and less convenient parking. Anymore, a trip to a large shopping center is becoming a much more significant experience in terms of time and energy, yet the consumer benefit isn’t as easily improved in tandem.

    We should have learned as one-stop department stores and individually located cosmetic/clothing stores replaced malls, so too will smaller targeted shop spaces with easy access replace the mega strip malls. From an urban planning perspective, this bodes well for the neighborhood village concept prevailing in sprawling communities we never thought possible. From an economic perspective, it potentially means a more competitive market environment as smaller more nimble companies can grab scarce space as easily as the behemoths of the world, and their suppliers will need to negotiate differently in turn.

    But most importantly, from the consumer perspective, this means that our daily transactions became even easier and less tiring than they have been. Our culture tends to value efficient transactions, so why shouldn’t the real estate market adapt accordingly?

  3. 3 James September 15, 2008 at 9:26 am

    I am big proponent of this idea and it would be good for landlords if national credit tenants sign the leases. The smaller store size gives tenants many more location possibilities in densely populated areas which are often under served. Other categories should follow suit, i.e., Target, Lowes, Home Depot, Kohls, Costco(Food % Gas), Circuit City, to name just a few. These stores currently offer a very broad selection of products at a wide variety of price points, why not tailor the product selection for the smaller stores to more perfectly fit the demographic they are located in??
    I don’t like Tesco, I think they are making a big mistake with their stores, they are very sterile and uninteresting (they could take a lesson or two from Trader Joes)and I found their product selection puzzeling at best. And then how popular do they think they will be blue collar neighborhoods if they continue to oppose the unions?? If they want to succeed here they should make some changes and soon.

  4. 4 Carol Gilbert September 15, 2008 at 10:23 am

    The 60,000 sq.ft. store was an invention of the grocers, not their customers. No one I know actually wants to drive for 15 minutes and then walk to the rear of a gigantic store to buy “emergency” food for the kids’ lunch! That may be why Walgreen’s puts the tuna and the cat food and the sliced bread along with impulse treats at the front of the store!

  5. 5 little nat September 16, 2008 at 8:22 am

    I think the smaller store is an excellent idea. This type of store has been working very well in Europe for many years and those people are not starving. The smaller the store,the fewer people are needed to run the unit in a successful way. In the US there are fewer and fewer people that are qualified to deal with the public. You just do not need to all that square footage for jams and jellies. Rock on smaller stores.

  6. 6 Susan September 16, 2008 at 9:37 am

    I was employed by a major Chicago area grocery when they started building 50,000 stores, which were unheard of before then. The idea was not just to provide a larger selection of food items to customers, but to include an inventory of higher profit margin non-grocery products which the smaller footprint could not accomodate. Since grocery anchors were-and are- able to negotiate low rental rates for long terms, the value of the lease is an important asset, and they could then afford the larger GLA. Increased revenues from non-grocery sales made the larger stores more profitable on a per sq. ft. basis.

  7. 7 James September 16, 2008 at 5:01 pm

    I’d like to see something like the Italian green grocer we had in our old neighborhood, Salimoni’s, he actually started out in a tent erected in a parking lot with peanut shells on the floor. It soon morfed into a 10,000 sf area with every possible item jammed in there, he had fresh fruit and vegetables of every discription, and excellent wine selection, fresh flowers, a butcher counter, a fresh fish counter, great bread baked fresh locally; there was stuff stacked in every corner and hanging from the ceiling. And you know the best thing of all, the people were great, they yelled across the store, they told stories and jokes and laughed, they took real care of you to make sure you got the best stuff, they got to know you and you them, they were really part of the neighborhood and they made you feel that way too! Uptight people would go in there and come out with a big smile on their face and free peach in their mouth. The little league pictures and trophy hung right by the door. Everyone shopped there, it was a ritual. The place had soul.

    Footnote: He didn’t sell soap, or frying pans, or toilet paper, or outdoor grills, or scare crows or Santa Clauses, there was no talk of profit margins or stock prices, or logistics.

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