Roadmap To Retail Growth: Why Bigger Is No Longer Better

Modern retail has long been guided by a powerful premise: the bigger, the better. Retailers, consumers and suppliers all benefited from economies of scale, but over the past 10 to 15 years, the retail store model has evolved. Supply chain process improvements have made it possible to achieve similar or even higher levels of profitability with smaller stores, paving the way for smaller retail chains to expand and take share from larger competitors in many markets. Further complicating retail’s evolution is the shifting global socio-economic landscape: Rising middle class, growing urbanization and coming-of-age Millennials are shaping consumer preferences.

“Perhaps the new retail mantra should be ‘Go small or go home,’ as the ‘Bigger is better’ paradigm has been challenged virtually everywhere,” said Steve Matthesen, president, Nielsen Retail Vertical. “Hyper-localization and specialization are fueling today’s retail growth. As lifestyle and consumption habits change, we’re seeing a structural shift in where consumers shop and what they buy, and some small formats are driving big growth. Mass-market strategies are also losing relevance as consumers look for unique experiences that meet their personal demands.”

So how can retailers stay ahead in the rapidly changing landscape? They can start by assessing how well they’re doing now. What do consumers think about the shopping experience, and how well do they think their needs are currently being met?

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