Earlier this year, Bloomingdale's launched its small-store concept known as Bloomie's -- a nod to the store's famous nickname. The first Bloomie's location opened this summer in Fairfax, Virginia, and features a range of casual attire, athletic wear, beauty products, accessories, and shoes.
Meanwhile, women's retailer Express is introducing a similar concept known as Express Edit. Express Edit will feature pared-down inventory and focus on presenting full outfits, complete with accessories, for a streamlined shopping experience.
In the coming years, we could see even more brands branch out and adopt the small-store model. Here's why that could really work to their advantage.
1. Less-expensive leases
Leasing less square footage often means getting to pay less, and that's something retailers are apt to want to take advantage of. These days, retailers need to divert more of their resources to the fulfillment of online orders to keep up with consumer trends. As such, they may not have the flexibility to maintain a larger footprint across malls and shopping centers.
Smaller stores force retailers to be mindful of the products they put out. By paring down their inventory, retailers can focus on trends and best sellers -- the items customers are most likely to want. And consumers can benefit from a faster and more efficient shopping experience.
Now that so many people are used to shopping online, the idea of spending over an hour browsing through store inventory may not appeal to busy consumers. And so cutting back on selection is a smart play. Plus, by limiting inventory, retailers might save themselves money on sourcing and shipping products.
3. The option to open more locations
In congested cities, opening expansive stores isn't always feasible. And even if it were feasible, it can be prohibitively expensive, especially in markets like New York City where square footage comes at a major premium. Smaller stores allow retailers to establish a footprint in more locations and grow their customer base.
Do smaller stores benefit real estate investors?
There was a wave of store closures that ensued in the wake of the pandemic, and now, mall and shopping center operators are grappling with vacancies. The loss of a number of department stores served as an even greater blow, as these stores commonly serve as mall and shopping center anchors.
The small-store movement might seem like a bad thing for real estate investors at first glance, because it likely involves having retailers sign less expensive leases. But actually, it could end up being a boon to investors.
Smaller stores allow retailers to open a larger number of locations, and they give them more flexibility as to which vacant spaces they can occupy. So there's no reason for investors to be anxious about this trend taking off.
Ultimately, malls and shopping centers need retailers to thrive. If they don't, they'll shutter and take their rent payments with them. And so if small stores are what it takes to keep retailers alive, that's certainly not a trend to bemoan.