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Small(er) Is Beautiful

Is the shrinking European retail footprint permanent?

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Time was when retailers in Europe seemed set on something of an arms race as far as size was concerned. The bigger, the better seemed to be the maxim, and there was more than the occasional whiff of corporate hubris about what was happening.

Since the crash of 2008, however, the lingering reluctance of shoppers to fund retailers’ overweening ambition has more or less put paid to this, and the new mood seems to involve a crash diet. Whether it’s food, fashion or general merchandise, there appears to be a dash to slim down both the numbers of stores in retailers’ real estate portfolios and, when new stores are opened, to ensure that they’re smaller.

To an extent, this goes hand in hand with two additional factors. The first of these is the Internet. Given that almost anything is available via the web, store numbers have begun to shrink as retailers realize that they really don’t need that many branches after all. Indeed, the smart ones have already slashed and burned as they move toward a multi-channel strategy, which seems to translate to fewer stores.

The other point is the move toward more local shopping. One of the effects of ever-rising fuel prices has been that driving long distances to get to the shops has become an expensive way of getting what you need. With this in mind, retailers of all types have moved toward smaller and more local and locally attuned outlets that mean relevance for specific shopper groups.

Does this mean that we have seen the end of massive warehouse-style shops with everything under one roof? Across Europe, this does appear to be the case, but it’s probably still too early to write the edge-of-town retailers off entirely. Better transport networks and, at some point, improving economies, mean that what we are seeing currently may be only a temporary blip. Small is beautiful at the moment, but big may yet stage a comeback at some point in the not too distant future.

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