Localisation Trend: Size doesn’t matter

Small is in. Big is out. When it comes to shopping, less is more as consumers are turning to small  retailers to save time, often receive better, more personalised service, and support local communities.

We’ve explored some reasons which are driving this trend towards small & special retail experiences:

Shoppers are seeking personal attention and convenience

Life is getting more complex and consumers are leading increasingly busier lives. They don’t want to waste their precious time wandering around enormous stores anymore. Many are looking for the ease and efficiency of smaller stores with specialised product ranges and more personal attention. And the big retailers are paying attention to this trend with several retail giants investing in smaller-format stores. Major brands such as Woolworths, Coles, Myer, and Bunnings have all been opening smaller retail sites to service inner city, time poor consumers.

Hyper-localisation and specialisation is fuelling the trend

“Hyper-localisation and specialisation are fuelling 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. 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, global president of Retail, Nielsen.

Last year, Woolworths opened its smallest ever supermarket with the Sydney launch of a 310 square metre outlet in York Street. The new format supermarket offers fresh food to go and a limited line of groceries for city shoppers and city residents. And Woolworths plans to open further similar stores in inner city Sydney and Melbourne in the future, with the rise of residential developments fuelling demand.

Growing demand from inner-city time poor consumers

The influx of city residents, driven by the growth in residential development, is also set to drive growth in other retail categories such as hardware and brands, like Bunnings, are set to capitalise on this trend. Time poor, inner-city residents do not particularly want to drive 20 or 30 minutes to buy common hardware items. It’s about convenience and demand. A retail outlet selling these things in the city, near to where they are already doing their grocery shopping fulfils a consumer need. An opportunity for retailers is to offer specialist personalised service, along with a product range of the most commonly purchased items.

Offering personalised service is a key opportunity for bricks and mortar retailers. Online retailers just can’t do it, no matter how hard they might try – even with chat-bots. It’s never going to be the same as face-to-face advice from a human expert, particularly in categories where consumers often seek advice, like hardware and arts and crafts, for example.

Lincraft, one of Australia’s major craft retailers, is capitalising on this trend. Lincraft is cutting its product range and opening a number of smaller speciality stores that provide more customer service, aimed at attracting more shoppers in shopping centres. Brian Swersky, joint Managing Director, was recently quoted saying, “The days of big barns are done in the retail world.” Lincraft decided to differentiate itself by offering, “A smaller store with more customer service,” according to Swersky. It is reducing its product range by a third in some 20 stores, focusing on a core range of products that were determined by reviewing sales data and prioritising lines that moved the quickest.

Smaller retailers are more responsive to consumer needs

Smaller retailers also have the competitive advantage of being able to rapidly adapt to change, whether it be to accommodate evolving consumer choice or finding lucrative niches in the market. And there are other benefits for smaller retailers: they cost less to open and operate; and take up less space, allowing them to capitalise on the potential of high-density areas and heavy foot-traffic.

If you are a retailer considering downsizing, or seeking to take advantage of this or other market trends, at Insight LED we can help you leverage actionable consumer insights to inform your business decision making and grow your retail sales.


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