Shopping goes XXS

Retailers are experimenting with a new way to earn outsized profits

Shopping goes XXS

Jack Atley/Bloomberg News/Getty Images

Megamalls, superstores, big box—for years retail has been dominated by the mantra that bigger is better. But some retailers are experimenting with a new way to earn outsized profits: smaller stores. Several U.S. chains have begun shrinking the floor space and amount of inventory in their stores, and shoppers appear to love it. In one case, the clothing chain Anchor Blue has put in walls to shrink some of its stores by half. The result has been a 23 per cent increase in sales, despite fewer clothing options. Meanwhile, Bloomingdales’ new store in Santa Monica is just one-eighth the size of its Manhattan flagship location.

There are two benefits to the strategy, Paco Underhill, a retail consultant, told the New York Times. Smaller stores keep costs down by reducing rents and culling inventory levels. More importantly, given fewer choices, customers actually tend to buy more. “We have reached the apogee of the big box,” says Underhill.

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