Aug 24, 2007

U.S. Retailing Pendulum Swings Back to Consumer Friendly Formats

More and more retailers are driving for smaller footprints and segment-specific formats. That's good news for consumers who have had to suffer through years of 'me-too' retail options in the U.S. The real estate strategies are just a lead indicator that the U.S. retailing pendulum is swinging back to higher-service, smaller-scale, more customer friendly strategies.

In the grocery sector:

In the U.S., Tesco plans a smaller scale format, based on U.S. research and modeled after the format already rolled out in five countries. Tesco's West Coast stores will likely offer high-quality prepared foods, which means California is a good place to start. ``More people on the West Coast are focusing on premium foods and the provenance of foods,'' said a leading researcher.

In the mass merchant sector:

Wal-Mart is preparing to test two new small-footprint formats in early 2008: a smaller, urban, convenience-type store and a stand-alone store dedicated to health services and products.The urban stores would reportedly be less than a tenth of the size of the company's supercenters which typically are about 200,000 square feet; and would be stocked with groceries that appeal to more affluent consumers...
In the U.S. apparel sector:
AnnTaylor stores confirmed it was launching a new store concept targeting the "modern boomer." It will involve a new chain of stores it expects to launch in the fall of 2008. While there are a number of companies that currently play in the broader boomer market, we believe that this particular segment has been the most significantly underserved and a huge opportunity"
In the food service sector:

Denny’s has unveiled a new prototype outlet that the company hopes will underpin its growth strategy in the US... The new design sees Denny’s change the colouring of the restaurant, both internally and externally; add a new “tower” design to the front, while the major development will see the new outlets be smaller than previous models. The smaller size has seen the outlets shrink from a standard size of 483 square metres to a new design of 372 square metres, which has only been accomplished through the use of smaller, more efficient equipment.
Much of this new strategic direction is in response to the rise of consumers' power and influence. According to Anthony J. Stokan (author of new book, Naked Consumption: Retail Trends Uncovered): "today's customer is considerably more aware, alert and educated than any previous generation of shoppers. The plethora of fashion and shelter publications consumers read, the ability to research anything spontaneously on the net, the staggering abundance of home-design and makeover television shows all heighten the average person's awareness of living a more stylish, more organized and more comfortable lifestyle."

This is all great news for branded product manufacturers who are desperate for more customer-friendly experience outlets capable of driving for growth with new products and new offerings.

But: Are manufacturers doing enough to support and nurture this retail pendulum swing? More to come...

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