Adapting to Shifting Consumer Patterns: The Trend Towards Small-Scale Store Expansion in the U.S.

The retail industry in the United States continues to expand small-scale stores. Analysis suggests that retail companies are responding to changed consumer purchasing patterns amid the COVID-19 pandemic.

According to KOTRA, on the 30th, Whole Foods Market, a large organic supermarket chain in the US, plans to open a new small-scale store called Whole Foods Market Daily Shop in Manhattan, New York, by the end of the year. The Whole Foods Market Daily Shop is approximately 20,000 square feet (1860㎡), only half the size of the average Whole Foods Market store area of 40,000 square feet (3720㎡). Whole Foods Market’s strategy is to open small stores in heavily foot-trafficked urban areas and capture the demand for commuting shopping.

Whole Foods Market is not only promoting small-scale stores to expand offline consumer touchpoints. The leading department store brand in the United States, Macy’s, plans to close 150 underperforming stores by next year and locally create 30 small-scale stores, one-fifth the size of existing stores.

Best Buy, an electronics retail chain, also plans to pursue a strategy of closing large stores and opening small ones. IKEA, a Swedish furniture company, plans to open four small-scale stores called ‘Plan and Order Points’ focusing on online order pickup and personalized interior design consultation functions in LA, Atlanta, and other locations by the end of this year.

KOTRA evaluated that retail businesses’ movements in line with the local purchasing trends that changed after COVID-19 are in full swing. As the nature of offline stores changes to places where consumers come to see ‘that product’ that appeared in e-commerce or influencer accounts, not to see as many products as possible, stores are transforming into forms optimized for consumer needs. Expanding small stores is expected to reduce rent, labor costs, and inventory burdens.

Seo Won Kim of KOTRA’s Los Angeles Trade Office stated, “Major players in the US offline retail industry are strategizing to respond to increasing demand for smaller-sized stores rather than larger ones,” adding, “Offline stores are evolving to provide the experiences customers expect.”