The Incredible Shrinking Store
By Tom Ryan
While mall-based apparel retailers in 2009 might have looked to
outright close weaker stores, the current year is seeing many reducing the
size of stores in a bid to improve store productivity.
After undergoing a store-closing barrage last year, mall landlords are said
to be more open to accepting downsized locations if it can help the store’s
chances of staying open beyond the lease expiration date, according to an article
in The Wall Street Journal. This marks a reverse from the ethos
of the nineties when more apparel chains were building more and ever-bigger
“During the ’90s era, everybody wanted a bigger box,” Kay Krill, AnnTaylor
Store’s chief executive, told the Journal. “Now, all of us are trying
to get out of those bigger boxes.”
AnnTaylor is reducing square footage at its new namesake stores by a third. “I
like productivity,” Ms. Krill said.
At Gap Inc., some locations where the company has multiple formats (e.g.,
GapKids, Gap Body, conventional Gap store) are being consolidated into a single
Gap’s chief financial officer Sabrina Simmons told the Journal that
some of Gap’s stores run up to 18,000 square feet but most can be just
as productive at 8,000 to 12,000 square feet.
“Quite frankly, it’s just not as positive of a shopping experience as a
smaller box that’s a more intimate experience,” Ms. Simmons added.
The move comes as average sales per square foot at American malls fell to
$401 at the end of 2009 from a peak or $454 in 2007, according to research
firm Green Street Advisors Inc.
Beyond reducing costs, smaller stores may help
merchants key in on winning merchandise calls. For instance, Paul Lejuez, an
analyst at Credit Suisse, believes the Gap’s larger stores forced it to broaden
its offerings for a wider age range and confused its image. But buying more
shrewdly for the smaller stores also presents challenges. Matthew Katz, head
of the retail practice at consulting firm AlixPartners, also noted that having
less inventory space forces retailers to speed product flow from suppliers
or come up with new ways of storing and displaying merchandise.
Discussion Questions: Is the trend toward smaller stores a positive or negative
for mall-based apparel stores? Are greater numbers of small stores a positive
or negative for malls?