The Next Big Thing
By Seth Mendelson

Think small.

That is what more and more retailers are doing in response to changing consumer shopping habits, which are proving that bigger is not always better. Merchants ranging from Walmart and Best Buy to Petco are moving away from their traditional big-box approach to introduce store formats that cut the size of their retail footprints by as much as 70 percent.

There are a number of factors at play here, including the fact that the Internet is playing havoc with the way consumers purchase products, higher real estate costs and more specialization. Also, the current thought among retail executives is that they no longer need to stock a broad assortment of products and can cut costs by catering to a more specific audience.

Petco, for example, has introduced Unleashed by Petco, a smaller-store footprint that specializes in natural, organic and higher-end merchandise. Walmart is opening more and more Neighborhood stores, units that cater to specific demographics and cut the size of the store and parking lot significantly.

Of course, this is a complete turnaround from the prevailing retail wisdom of the last three decades. Led by Toys ‘R Us and Walmart in the early 1980s, retailers felt the only way to financial success was to open stores that stocked as much merchandise as possible. One-stop shopping, a phrase that has been used and overused for nearly 30 years, was the basic philosophy amongst executives in the retail trade for most of that time.

Today, it remains a basic tenet of retail, if only because time-starved consumers do not want to shop multiple stores for their needs or the needs of their pets. But, with the Internet giving consumers so many other options, especially to research what they really want, many retailers say they no longer need the floor space to educate consumers in-store or to stock slow-moving items that can be easily purchased through their websites.

So where does that leave the independent pet store operator? These smaller stores should help level the playing field amongst all operators. By emphasizing their own unique merchandise mix—developed by carefully learning about the demographics and shopping patterns of people who live near their stores—independent retailers can now compete with larger chains by stressing service and, yes, convenience.

The trend to big retailing is over for now. Small is “in,” and that may be good for the independent retailers trying to stay ahead of the game in an ever-changing retail landscape.