More people are moving to cities, creating an expansion of urban areas. In response to this rise of urban growth, leading retailers are following shoppers into city neighborhoods. Retailers, therefore, need to shift focus and adapt to smaller format stores where they can no longer depend on a wide product assortment on shelves. A clear grasp of store attributes, knowledge of the surrounding community, and a deeper understanding of the customer are now imperative to find success in a smaller space.
Although retailers are transitioning to smaller stores with a more specialized, intimate retail experience, they still need to offer customers a large product mix.
When downsizing to a smaller footprint, there are a few kep considerations retailers should keep in mind:
Get to Know the Millennials
Millennials are at the forefront of the urbanization trend. They want walkable neighborhoods, shorter commutes to work, and authentic experiences in communities that reflect their personalities. For Millennials, shopping is an experience rather than a way to acquire things, and since they are a mobile-first, always-connected generation with easy and immediate access to a wealth of information, they are also savvy, selective and demanding. If Millennials aren’t engaged when they enter the store, they walk out without purchasing.
Go Local. It’s a Must.
With the rise of urban growth, large retail stores are getting stiff competition from small shops that offer more localized experiences. The people who frequent a store in the financial district are significantly different from the ones who shop in that same brand’s store next to the university a few blocks away. Addressing local needs is critical in developing a superior experience. By delivering the most locally relevant products and producing targeted campaigns, each store can meet the community’s demands and develop a more authentic experience.
Small Store Does Not Mean Small Inventory.
Although retailers are transitioning to smaller stores with a more specialized, intimate retail experience, they still need to offer customers a large product mix. Yes, shoppers are looking for a more personalized experience with a localized focus, however, they also have unlimited purchasing options online. It’s tricky business. Today’s shoppers have high expectations. Retailers will benefit from adopting a digital application that will optimize product selection and localize visual merchandising, yet allow store associates to offer, order and deliver merchandise that isn’t physically stocked in stores.
Be Nice to Your Neighbors
Small neighborhoods within cities offer tight quarters, so retailers are forced to dwell in close proximity to competitors, from small local boutiques to other big retailers taking advantage of the urbanization phenomenon. People living within the community want retailers to contribute with authenticity and take on a sense of the local culture that surrounds them. Through strategic partnerships, leading retailers can become genuine members of the community. A big box store can partner with a local coffee shop to create a limited-edition co-branded blend, or expand a small gallery’s space by displaying local artists’ work. Collaboration between retailers create unique experiences, cater to local needs, and build meaningful customer connections that strengthen the brand perception and give a reason for customers to purchase.
The accelerating increase of urbanization has changed the rules of retail. As retailers pursue customers in dense urban areas, they will need to rethink their retail strategies.
The majority of people, especially Millennials, aren’t driving long distances to buy in bulk at large have-it-all retailers. Shoppers have infinite online purchasing opportunities and now look to stores for unique, personalized, and engaging human interactions and experiences.