• by Blake Crist , Eric Pakurar , October 26, 2015

More and more retailers are recognizing that a one-size-fits-all approach does not work the same across developed environments. Urban shoppers will have vastly different needs than suburban shoppers and vice versa. Just like individual shoppers, not all stores are created equal and not all geographic locations can receive the same treatment. 

Target and Walmart have both made experimenting with smaller-format stores a priority. PWC and Kantar also named this as one of the key trends that will majorly affect retailers by 2020. Walmart is tackling this trend by opening almost 25 smaller stores, many under its Neighborhood Market banner. Following a similar path as Walmart, Target is expanding its number of small-format stores and rebranding its existing smaller stores, CityTarget and TargetExpress, as Targets. 

While these two giant retailers are leading in activating against this trend, there are plenty of opportunities for other retailers and CPG brands to join the bandwagon. 

Focus your offering

While Target and Walmart have made strides to focus their formats, Home Depot is slightly behind the curve. No matter where you live, your local Home Depot will be pretty much the same. Whether you’re in New York City, a small city or a suburban town, the store format will be large and include everything you need for major home improvement projects. The problem is that if you live in NYC you likely would be going to Home Depot for very specific reasons. You’re going to be focused on more DIY projects and small space solutions vs. house remodeling and outdoor landscaping.

Retailers, like Home Depot, that are already niche in their offering could greatly benefit by utilizing smaller formats and narrowing their focus based on location but also remaining flexible as a way to appeal to the specific needs of various shoppers, no matter where they live. Either way, CPG brands must focus on new, smaller or single-serve SKUs that play to these formats by partnering with retailers to ensure the brand’s product matches the needs of shoppers and the format.

Create an experience

Another opportunity is for retailers to focus almost entirely on the in-store experience. LittleBits, a DIY robotics manufacturer, has taken this approach for their new NYC pop-up store. This works well because it takes a product and gets shoppers experimenting with that product like they would at home. Even though most retailers do not sell a product as niche as LittleBits, there’s still a benefit to offering an immersive in-store experience, regardless of the products and services offered. Stores that don’t typically operate in big cities such as Cabella’s, could consider opening experience-based storefronts (i.e. for the urban out-door adventurer).

CPG brands can win here by creating temporary in-store experiences that immerse the shopper at the retail location. This is a surefire way to demonstrate new ways of fitting your brand’s products into their lives. And how about education? Brands should also spend time educating retail store associates on how their product can be used as part of a larger experience. This helps to win-over shoppers by having an advocate for your brand at a crucial junction in their purchase journey. 

Don’t forget e-tailers

Just because an ecommerce site doesn’t operate out of a physical space doesn’t mean there isn’t an opportunity for them to also function out of a smaller-format store, either permanently or temporarily. Retailers like Amazon can bridge the online and offline experience by creating spaces to be used as a logistical hub for same-day delivery or pick-up. This would allow online retailers to keep the bulk of their shopping process online while still delivering on the ease and convenience that shoppers in urban settings have come to expect. This opens doors for CPG brands to provide an engaging digital experience that is tailored to a shopper’s location. By creating dynamic online content based on where a person lives – this digital evolution will seize the smaller-format brick and mortar trend. 

Where and how we live is imperative for retailers to think about while setting-up shop. However, the question that CPG retailers and brands need to focus on is not the raw data of where people are moving to, but who is living where and, most importantly, how their behavior varies. Taking these factors into consideration will provide the actionable, meaningful insights retailers need to streamline their brick and mortar shops to ultimately create more tailored formats that will set them up for success.