Is Small Box Retail The Way Of The Future?

A small-box retailer operates their business very much the same as their larger counter parts but simply utilize less square footage meaning they don’t have as much space for their products, and therefore much less rent, and have fewer staff to deal with, which when combined can be a lot less overhead. With the small-box locations you will not have as much inventory but you can adjust by having an online presence or have 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 are seeing several retailers that are currently in big-box location grow their presence by opening small-box locations that really are not far away. There is an entire new development of small-box retail that had its grand opening in the Pacific Palisades neighborhood of Los Angeles on September 22^nd and it’s a huge hit. Customers will find small-box stores located in that development that have big-box locations within a 15 minute drive. If this development proves to be the success it looks like it’s going to be 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 notice that they are customizing their merchandise toward the clientele that are in the area and are creating an enjoyable shopping experience for their clients, especially the developments that are targeting the higher end clientele. The developments themselves seem to be focusing on creating the best experience for shopping they can as well, I see art being placed in public areas as well as places for community events to be held.

In the end I can see how these small-box stores could easily become the way of the future, the experience I’ve had walking a few of these development was very positive and I believe most will like the convenience and environment these developments create.

Joe Killinger is CEO of the RRD based in Dallas. The views expressed here are the author’s own and not that of ALM’s Real Estate Media.