Urban Store Formats
Target Bets Big on Small
Target is on a small-format opening spree in college campuses and dense urban and suburban areas. In October 2017, the retailer opened 11 small-format stores, ranging in size from 20,400 to 48,000 square feet. By January, it opened four more, bringing the mass merchant’s small-format total to 59. The retailer planned to launch an additional 71 by 2019.
“The flexible design of our small-format stores allows Target to open in smaller locations where a traditional big-box footprint wouldn’t fit,” says Target spokeswoman Jacque DeBuse, adding that traditional Target stores average 130,000 square feet. “That means guests who would otherwise have to go to the suburbs to do their shopping can pick up their items closer to home.”
Products at each store are tailored to meet the needs of the area. For example, stores located in cities, where shoppers are more likely to use public transit, carry smaller pack sizes so they’re easier to carry home. The retailer also adjusts product assortment based on customer feedback.
“When we first opened the small-format store near the University of Minnesota,” DeBuse recalls, “we focused our assortment on meeting the needs of a college [shopper], such as office supplies, fresh food and college apparel. Very quickly, [shoppers] told us they wanted more of the apparel and accessories … given many of the students didn’t have cars to go shopping outside of the neighborhood. We adjusted our assortment to include those categories and consider that feedback as we’re planning the assortment for other college or urban locations.”
Small-format stores also serve as convenient pickup points for online orders, which can be a perk for city dwellers, DeBuse says. “For [shoppers] in a high-rise building … this service gives them peace of mind that their order will be securely placed in their hands that day rather than sitting on their doorstep.”
Target’s small-format strategy has paid off so far. In October 2017, chief executive officer Brian Cornell said sales per square feet at the mass merchant’s small format stores were “easily double” that of traditional stores. “What Brian shared still stands true [as of January],” DeBuse says. “The sales productivity of our small-format stores is much higher than our company average. Generally, guests shop our small-format stores more frequently with smaller basket sizes than our traditional-size stores.”
— Cyndi Loza
PetSmart’s The Groomery
PetSmart launched a new service-focused urban format dubbed The Groomery in 2017, opening locations in the Chicago, New York City and Washington, D.C., markets with more expected in 2018. The stores stock a limited selection of premium products including treats, toys and at-home grooming supplies. Most of The Groomery’s customers live within five miles of the store.
“Grooming is often viewed as a neighborhood business, so this smaller store format lets PetSmart grooming go into neighborhoods to bring the PetSmart grooming expertise closer to those communities,” PetSmart vice president of services Joanna Zucker says.
Rather than competing with channel rival Petco, The Groomery takes aim at local pet salons.
“The Groomery salons feature at least eight wide, easy-to-maneuver tabletop spaces for the PetSmart grooming staff, all of whom are academy trained and undergo 800 hours of certification training and a six-month apprenticeship,” Zucker says. “Our training program is a key differentiator for us and gives us a leg up compared to independent grooming salons.”
The launch of The Groomery follows the 2016 opening of the PetSmart Pet Spa, a single test store in Oceanside, N.Y., that also focused on services.
— Samantha Nelson
In part to address space restrictions that can make it difficult for big-box retailers to infiltrate urban markets, Walmart launched an Express format averaging some 15,000-square feet in 2011. Three years later, the retailer pulled the plug on the small-sized experiment, converting all its Express locations to mini-Neighborhood Markets. The mid-sized Markets are on average 45,000 square feet and offer a broader array of grocery items such as fresh and ready-to-go foods. The retailer also has had success entering some urban areas with smaller versions of its traditional 100,000-square-foot big-box discount stores. Opening stores in “food deserts” has helped the retailer combat “anti-big box” activism – though some cities, including New York, San Francisco and Seattle, remain holdouts against the chain.
— Patrycja Malinowska
Amazon finally opened its checkout-free Amazon Go convenience store to the public in January following delays as the retailer fine-tuned the network of cameras and sophisticated computer vision and machine learning software that power the functionality. Located in Seattle, the 1,800-square-foot pilot store is stocked with shelves of perishables and other packaged food. It automatically charges shoppers’ Amazon accounts as they walk out the door with their items. Shoppers place items directly into shopping bags and receive an electronic receipt after leaving. The retailer hasn’t said whether it plans to open more of the stores. Amazon also operates 13 Amazon Books stores in urban markets including Chicago, New York, Los Angeles and Seattle. More locations are already planned for cities including Austin, Texas, and Washington, D.C. Modeled on Amazon.com, the stores face all book covers outward on the shelves and tags list their Amazon.com star rating, customer reviews and additional reading recommendations. The retailer additionally operates two AmazonFresh pickup locations in Seattle, letting members order groceries online and have them dropped in their cars at the drive-up locations.
— Patrycja Malinowska
CVS/pharmacy opened a flagship location in New York’s Times Square in September 2017 that follows a new format for the retailer. At more than 13,000 square feet spread over two floors, the store had an expanded selection of health and beauty products and better-for-you foods meant to position the chain as a holistic wellness destination rather than just a place shoppers go when sick. The store hosts a pharmacy, walk-in health care clinic and an optical center. New products are grouped into “discovery zones” based on themes such as healthy eating on the go and advanced skin care. The new flagship and another recently renovated New York CVS are the first locations to include a K-Beauty store-within-a-store that stocks nearly 500 Korean beauty products.
— Samantha Nelson
Lowe’s continues to thrive in urban locations by replacing its standard large store offerings with unique features in a smaller footprint. The retailer’s stores typically average 112,000 square feet, plus 32,000 square feet for garden centers. The urban locations stock assortments tailored for specific city markets such as Chicago and Manhattan (New York City) in spaces as small as 30,000 square feet and no larger than 60,000 square feet. The smaller stores contain slimmer endcaps touting new products and services between shorter aisles. The retailer maximizes the space by using digital menus and touchscreen displays wherever possible to provide additional product information. The virtual approach is especially useful for the appliances category, where a full assortment of refrigerators and washers and dryers would otherwise require a significant amount of floor space. Lowe’s also can access inventory from nearby traditional stores to deliver items not stocked within the limited urban stores.
— Charlie Menchaca
Meijer plans to open a new urban grocery store format dubbed Bridge Street Market in early fall 2018. Located near the mass merchant’s headquarters in Grand Rapids, Michigan, the 37,000-square-foot store will cater to downtown workers and residents by offering a full selection of groceries, a deli, a bakery, fresh-cut meat and a limited stock of paper products and cleaning supplies. The retailer also plans to open a second small-format store in Detroit in 2019 that will be about 42,000 square feet. Meijer’s traditional stores are 200,000 square feet, though the retailer had experimented with 90,000-square-foot locations in the Chicago area before closing all of those locations in 2017. The new format ditches the mass merchant’s general merchandise offerings altogether, instead competing more directly with supermarket operators.
— Samantha Nelson
Kroger launched Main & Vine in February 2016 as a way to reach young, urban shoppers but shuttered the concept in January 2018. The 27,000-square-foot store was focused on local and sustainable foods and had a dedicated event center for cooking demonstrations and tastings. However the retailer did not consider the concept a failure and said it will integrate some of the features it tested there into other stores. Kroger has also been learning from Mariano’s Fresh Market, a Chicago-based banner it acquired in 2015. Mariano’s stores focus on prepared foods, serving made-to-order juices, guacamole, oysters and glasses of wine and beer. Some recently renovated stores under Kroger’s other banners borrow these features or have food halls where local vendors serve meals.
— Samantha Nelson