Types of Retailers

Kristina Shevory, “Mini Versions of Big-Box Stores,” The New York Times, May 20, 2009.

Big box retailers, such as Office Max, Best Buy, and Wal-Mart are trying smaller formats to respond to the recession. Almost as fast as retail chains are closing their stores, some are opening smaller formats for various reasons.

For example, retailers can build the smaller stores faster and operate them less expensively. Office Max’s concept store, Ink Paper Scissors, is only 2,000 square feet, compared with a traditional 18,000 square foot site. The smaller store offers just the basics of what customers would find in a typical big box store. Wal-Mart similarly is opening specialty food stores, and Best Buy already has 30 mobile phone stores.

In addition, the smaller format allows the retailer to focus on just a portion of its business. Best Buy Mobile stores offer 90 cellular telephones with service plans from nine carriers. These stores represent a significantly smaller investment by the retailer for both inventory and retail space, and also gives them a means to increase their footprint in the wireless market, a difficult task for its big box formats.

Lowe’s new 66,000 square foot stores are significantly smaller than the average 117,000 square foot centers and help the home improvement retailer test new or rural markets, new concepts, and niche products. Thus, the retailer is able to expand or withdraw quickly, with a lesser investment, approximately $2 million less than that demanded for a typical Lowe’s.