Is Thinking Smaller the Answer to Big-Box Retail CX?

For decades, big-box stores drew in foot traffic by offering a combination of convenience mixed with a healthy dose of selection and savings. Shelves were fully stocked with a variety of trusted brands, all available at the low price only large-scale chains can offer. Because the stores created a one-stop retail experience outside of urban environments, shoppers would flock to these stores on a weekly basis for groceries, household supplies, and other essentials — all while taking periodic detours to peruse the aisles of beauty, apparel, home decor, and so on.

Target, one of my company’s clients, is extremely successful at building shoppers’ baskets due to its large inventory, allowing for greater cross-category merchandising and better customer experiences. We’ve all heard the anecdote (which has now been coined as “the Target effect”) about going in for deodorant and coming out with $200 worth of goods. It’s nearly impossible not to come across a new product during your time in its stores.

Although this is a highly successful business model, the past year has also created opportunities for small to midsize stores. Flexibility and adaptability are necessities in rapidly changing environments, and not all can master the test-and-trial of new floor formats like Target. The expenses, combined with staffing needs and long lease agreements (not to mention changing consumer expectations involving convenience and speed), can make a retailer neither flexible nor adaptable. In fact, many big-box stores are in the process of reassessing how to use their retail formats, which might lead to a 20 percent decrease in retail real estate inventory over the next five years.

So the question is this: Is the future of retail no longer big box? Or are there opportunities for big-box retailers to embrace new retail trends and evolve to meet the changing expectations around customer experience (CX)?

Rethinking the Big-Box Retail Format

Although many big-box retailers were deemed essential and remained open during the pandemic (leading to record profits and a possible skewed vision of brick-and-mortar trends), something else happened: In search of variety, shoppers once averse to e-commerce began ordering online — and they liked it. Consumers spent $861.12 billion in the U.S. e-commerce space in 2020, which was a year-over-year increase of 44 percent.

What does this mean for the big-box retail experience? Let’s go back to the basics. Convenience was the original tentpole. If that aspect of the customer experience hasn’t strayed too far, then it should still be relevant for big-box retailers. Today, it’s more about reimagining what convenience has evolved to mean. And with so much consumer data now available, you’ve already got the answer. You know what products people buy, when they buy them, and which items are most often bought together.

Consider Amazon.com, an e-commerce behemoth that’s now leveraging brick-and-mortar trends with its array of physical stores (Amazon 4-star, Amazon Go, and Presented by Amazon). It had the data, used it to shape new concepts around convenience, and drew consumers into relatively small retail formats. Lowe’s is also exploring smaller retail formats with “Pro” shops found within its larger-footprint stores where home improvement pros can come in or order essentials online for pickup. Again, it’s all about rethinking convenience and improving the customer experience.

As big-box retailers continue to experiment and develop these capabilities for key demographics, understanding how to operate in a smaller footprint will open up new opportunities to bring those smaller retail formats into urban locations (suburban locations, too, if need be). Going smaller also opens up new possibilities with the retail format and product offerings, setting the stage to fail fast and learn quickly on the quest to meet ever-changing customer needs.

The future of retail might still be fluctuating, but it will include big-box retailers. Those stores might just look a little a different. It’s all about considering — or reconsidering, really — what the space can do for both the customer and the business. Is the future of retail stores smaller front-of-house spaces with more expansive back-of-house areas for fulfillment and delivery? Is it 24-hour pickup locations in stores that no longer draw the same level of foot traffic? Ask the questions, look at the data, and explore all the possibilities.

Holly Draher is a national account at Harbor Retail, a company with 70-plus years designing, manufacturing and delivering engaging retail experiences: traditional to highly engineered fixtures to integrated technology.