Why Stores are Testing out New Sizes
The pandemic changed the way that we shop. Two hour delivery used to be a pipedream or a big city exclusive. Pickup was inefficient. Curbside was nonexistent. But all this changed. Now, customers can get quick delivery from first-party services like Walmart or third-party apps. Items can be ready for pickup on a dime. Curbside is a reality.
But stores are about to adapt to these. Instead of the pandemic hodgepodge, the next generation of stores will be optimized for current preferences. For example, backrooms will be built for fulfillment instead of providing limited storage.
Bigger or smaller, the retail store footprint is changing. Though we discussed the concept of shrinking stores in a recent article, we’re today looking at some stores taking the opposite approach—adding square footage.
Why Bigger Might Mean Better for Some Stores
Whether the stores get bigger or simply change layouts, customers serve to gain. So do retailers. Here are just some of the benefits that post-pandemic store design can provide in terms of inventory, customer satisfaction, and margin.
Ready to Go
Expanding—or changing—a store layout can save companies on fuel. How? Inventory will be closer to the customer. Instead of relying on distribution centers, bigger stores will allow retailers to better meet demand, offer more merchandise, and support same-day services.
This according to Modern Retail’s article on Target’s decision to open bigger stores, noting that large stores are expected to serve as hubs for digital fulfillment.
“Target’s new stores will have a backroom fulfillment space that’s five times larger than previous stores of a similar size. This will allow stores to “fulfill more than 95% of the retailer’s digital orders and same-day services accounting for more than 10% of its overall sales,” according to a press release.”
Efficient Pickups—In-Store and Out
Expanded stores will also make for a better pick-up experience. As mentioned earlier, behaviors changed during the pandemic. But store design changes take time. Though many retailers made space for curbside pickup and BOPIS, the changes weren’t truly structural.
Now, with a better understanding of how customers behave post-pandemic, retailers are going to fundamentally change how they deliver pickup. As highlighted in a Retail Info Systems article, curbside won’t simply be for pickup—some retailers are embracing curbside returns. Target is even going forward with offering curbside pickup for their in-store Starbucks.
Turning Pickups into Additional Purchases
The transition to in-store pickup created a challenge—how do retailers recapture incremental revenue? Impulse buys used to be easy—strategically place low-cost items near the point of purchase to catch the eyes and wallets of people waiting in line.
But the transition to in-store pickups eliminated the impulse buy. Customers would walk in, go directly to a customer service desk, pick up their items, and walk out. No space for impulse items. But redesigned stores can reignite this demand.
Creating new spaces for pickup can create opportunity. A pickup space can provide the same experience as a point of purchase—but better. No longer is it a 20 oz. Coke and a pack of gum offered to someone who has spent the last hour wandering the store. Now, an impulse buy can include a wider variety of items.
Freedom to Partner
Though they might not be new in the retail world, it’s starting to look like shop-in-shops are the future. And a larger store footprint will make it easier to implement them. For example, Target’s expansion will facilitate shop-in-shop openings with stores like Apple and Ulta.
Something we’ve discussed in recent articles, shop in shops are quickly becoming ideal options for retailers and brands. From co-branding and shared marketing to broader reach, shop in shops are affordable for brands and beneficial for retailers.
The Rise of the Third Space?
It might not simply be a retailer within a retailer. Something that has become popular in the world of the grocery store, third spaces add new ways to create community and serve customers.
“Grocery stores are including more dedicated spaces for customers to gather and socialize, reports Modern Retail. These spots, also known as “third spaces,” are ways for grocers to earn more revenue and entice shoppers to enter their stores and stay awhile. Many convenience retailers also have incorporated indoor or outdoor spaces for community gatherings, from Friday night high school hangouts to Sunday morning gospel sings.”
Initially gaining popularity prior to the pandemic, third spaces regained momentum this year and are quickly becoming community hubs. Want to grab a craft beer while waiting for the rush to die down? Hy-Vee and Whole Foods offer it. Fresh made breakfast? Why not?
Retailers of all backgrounds could benefit from this. Not only would this help to improve margins, it could broaden the customer base.
Creating Unforgettable Retail Experiences
Bigger or smaller, retail spaces are changing. And it pays to create a positive experience for shoppers. From short-term pop-ups to bold and experiential flagships, you need a partner who’s capable of turning your vision into a reality.
And that’s where we come in.
As a custom manufacturer of fixtures and furniture, Morgan Li is ready to combine skill and scale to deliver on time, on budget, and just like the rendering. While others pride themselves on being retail experts, we don’t. We’re retail fixture manufacturing experts.
If you want a partner with the background, capabilities, and craftsmanship to get the job done right, let’s get in touch.