Is Small Box Retail The Way Of The Future?

“The economics are in favor of the small-box retailer, having to spend less on your lease rate means you can spend more on marketing, inventory management, customer management and of course less staffing.”

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A five room movie theater, redesigned in the Pacific Palisades. (Original Photo by Mel Melcon / Los Angeles Times)

A small-box retailer operates their business very much the same as their larger counter parts but utilizes less square footage. This means that they don’t need as much space for their products and therefore have a lower rent and fewer staff to deal with which equals a lot less overhead.

With the small-box locations you don’t have as much inventory but you can adjust by having an online presence or having the ability to send the clients their purchases the next day.

The economics are in favor of the small-box retailer, having to spend less on your lease rate means you can spend more on marketing, inventory management, customer management and of course less staffing. We’re seeing several retailers that are currently in big-box location grow their presence by opening small-box locations that aren’t far away. There is an entire new development of small-box retail stores that just had its grand opening in the Pacific Palisades neighborhood in Los Angeles on September 22nd and it’s already huge hit.

Customers will find small-box stores located in that development that have big-box locations within a fifteen minute drive. If this development proves to generate continued success it could be a lightning rod that proves this is a great way for a retailer to grow their market share while maintaining control of their overhead costs.

When walking the developments that are focusing on small-box retailers I noticed that they’re customizing merchandise toward clientele that are in the area and are creating an enjoyable shopping experience for their clients, especially targeting the higher end market.

The developments themselves seem to be focusing on creating the best experience for shopping that they can, art is being placed in public, and community events are already being organized or promoted in public.

The convenience and atmosphere that the Pacific Palisades development provided is something that I believe will create an interest for further small-box retailers in the near future.
I can see how these small-box stores could easily become the way of the future.

Joe Killinger is CEO of the RRD based in Dallas. This article originally appeared on Globe St.com

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