The belief in retail that bigger is better may be fading. National chains known for their huge stores are starting to think smaller.
Big-box retailers are moving away from the one-large-size-fits-all strategy to a philosophy of getting more out of smaller spaces and assessing the needs of each location.
Wal-Mart Stores, whose Supercenters typically encompass over 185,000 square feet, has announced plans to build a number of 30,000- to 60,000-square-foot stores.
Many other big-box retailers – including Best Buy, Office Depot, Target, Kohl’s and J.C. Penney – are looking to downsize existing stores, said Howard Davidowitz, president of Davidowitz & Associates, a national retail consulting and investment banking firm in New York.
“It’s the biggest retail trend in the U.S. – almost everybody is downsizing,” he said.
Some chains are looking to downsize existing stores, while others are planning to make future stores smaller, Davidowitz said.
The downsizing trend is emerging locally.
“There are more big-box retailers in Houston interested in downsizing than at any time in the past 20 years,” said Kenneth Katz, a principal at Baker Katz, a local commercial retail brokerage firm.
“We are still at the front end of the trend,” Katz said.
In Houston, Office Depot, Best Buy, Old Navy and Ashley Furniture HomeStores are among the chains looking to downsize existing stores, said Ed Wulfe, chairman and CEO of Wulfe & Co., a retail development and brokerage firm.
“Almost all big-box retailers are reassessing store size,” Wulfe said. “It’s different than 10 years ago when bigger was better.” They’re looking at ways to better utilize their space and get more sales per square foot, he said.
Department stores, including Sears, are seeking opportunities to sublease space in their stores, he noted.
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