Retail Industry – When is the Right Time to Rightsize?
Rightsizing: It has become a trend over the last few years in the retail industry. New, smaller stores are popping up everywhere it seems, both as larger stores downsize and as previously online-only companies make the move to physical locations. A less is more approach is clearly being adopted on a massive scale. We call this trend rightsizing – but when is the right time?
With a major change in shopping behaviour, retailers have had to rethink previous strategies. Online shopping has made the “Bigger is Better” store obsolete. No longer are the massive physical locations necessary, and many retailers are recognizing this.
For example, back in January, America’s largest department store chain Macy’s finally hopped on the rightsizing train by announcing plans to tighten their belt: 40 of its 150,000 to 250,000 square foot full-line stores will be cut, while 50 new ‘Backstage’ locations, its off-price spin off chain, which average 30,000 square feet, are in the works.
Urban living is also a factor. Wal-Mart, Best Buy and Staples, for example, have begun opening smaller locations in urban areas that better suit consumers’ increasing demand for convenience. Not only can retailers such as these not find the space to build massive stores in increasingly crowded urban areas, that gigantic space just isn’t needed anymore. People are shopping online and having items delivered at their convenience.
So, when is the right time to rightsize? Whenever it feels right. Your own metrics are what will determine the date, based on a number of factors – one of the biggest being the value you get per square foot. Rightsizing can definitely increase that value – but you have to determine when to take the leap. However, when you’ve chosen to make a change, here are some things to think about:
- Make sure the transition is a smooth one. Rightsizing is inherently disruptive, but customers don’t want to see the disruption. Keeping the chaos at bay is crucial, so try and carry out the move/renovations/changes/set-up when customers are going to be impacted the least.
- If you move to a smaller store, make sure to update the physical experience. With a smaller store, fewer SKUs will be housed, and thus you need to ensure customers are aware of what is available online. Easily accessible terminals on the floor to browse online is a great way to overcome this challenge.
- On that note, if you are downsizing, ensure your online marketplace is well stocked and updated – make sure it can handle an influx of transactions. You don’t want customers to switch to a competitor because your online inventory doesn’t match what is in stock.
The retail industry keep up with current trends to stay relevant. Rightsizing may just be the way to do that.
Marketsupport can help with all of your rightsizing needs, from tear-down to set-up to people support. Contact us today at 1-877-421-5081.« Back to Blog