Advice

The Smart Way to Shrink Your Retail Store


Retail space isn’t what it used to be. More people are browsing and buying online. Stores can get products faster from manufacturers, so they don’t need as much space to warehouse inventory. Small businesses are thus moving to smaller storefronts to lower costs.

If you’re going to shrink your footprint, make sure you have a plan.

“Understand why you’re doing it; understand why it’s better to do than not to do it,” says John Krubski, a retail marketing consultant with ITLC Insights. The decision “will inevitably have consequences lasting beyond the immediate circumstances,” he says.

There are smart ways to cut your rent by half—or more. Most retailers should be exploring them, especially if they have large warehouses or other space dedicated to storing inventory, says Bob Phibbs, a retail consultant at Retail Doctor. “Just-in-time delivery is now available from most anyone,” he says. “Many retailers are paying for space they simply don’t need.”

Some strategies—like subletting or moving to smaller quarters—are obvious. Others require creativity, such as finding a partner that could rent a kiosk or a counter in your storefront. Or you might sell some space to a service provider—putting a tailoring corner in a dress shop, for instance.

Krubski offers the example of a hardware store that brings in a handyman to teach fix-it-yourself classes. “The combination of the tools and supplies with people who know how to use them offers the homeowner new options and creates a win-win-win scenario,” he says. “The hardware store owner reduces rent, enhances his brand, and possibly increases the market and sales,” he says. Customers get hands-on help, and contractors gets to market their services.

Such deals can backfire, so proceed with caution. Avoid partnerships that might diminish your brand—or even worse, cost you store traffic and turn off your existing customers, Krubski says.

What you’re looking for is not just a short-term reduction in overhead, but a brand or product that complements your own without sending customers to a direct competitor. You also want to make sure that a branded space doesn’t cheapen your layout or come across “looking like those old, giant gumball machines in vogue during the ’90s,” Phibbs cautions.

The store-in-a-store concept harkens back to the mid-20th century, when the butcher, baker, and produce vendor first came together in a one-stop, supermarket concept, says Gary Ambrosino, president and chief operating officer of TimeTrade, a Boston software company. He sells retail systems to large companies, as well as to about 10,000 small businesses. His clients report that customers today have done their comparison shopping online and visit stores to buy, not browse.

“The old paradigm had stores struggling to boost their sales per square foot when they had these large footprints. Now they’ve got the possibility of shrinking the space and making it really efficient,” he says.

One way to do that is to train your staff and turn them into experts who can provide the highly personalized service that shoppers can’t get online. “Moving to a high-service model can drive a lot of foot traffic, and if you give people the opportunity to make an appointment to see the expert in your store, you can accommodate them, even in a smaller space,” Ambrosino says.

While as many as 70 percent of people who walk into stores have already narrowed their buying choices, they are still seeking the kind of emotional validation for their purchase that they can’t get online. “They want to make sure they are not making a mistake and they’re interested in getting smart advice from a knowledgeable person, face-to-face,” he says. That kind of one-on-one interaction requires good employees—but doesn’t have to take up a lot of room.

Karen_klein
Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.

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