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Bob Young: The Incredible Shrinking Big Box

Bob Young

The “big box” has occupied a significant place in the commercial retail world in North Texas and throughout the state. The “category-killer” concept was based on large-format retail spaces for concepts offering a narrow focus with wide selection. Whether the concept was for a category like pets or electronics or linens, the big-box format meant huge inventories in huge spaces.

Now, due to the economic downturn and sales pressure from the internet, many big-box retailers have found the need to reduce occupancy costs and, thus, the need to reduce their respective footprints while still maintaining their merchandising and sales strategies. Retailers are increasingly finding that new formats—smaller formats—can better effect these strategies. This is a complete reversal from the birth of the category-killer, big-box format in the early ’90s, when it seemed that every time a retailer announced a new prototype store, it meant a much larger store.

Let’s start with the retailer that has often operated the biggest boxes of them all: Walmart. About a decade ago, the retailer’s Supercenter format typically totaled around 225,000 square feet. But stores opened in Texas in recent years include a 99,000-square-foot Supercenter in Austin, and the majority of its new stores going forward typically don’t exceed 170,000 square feet.

Kohl’s also has a new format, one that totals 60,000 square feet, compared to 90,000 square feet in the past. Old Navy’s format is shrinking from 24,000 to 15,000 square feet. This same type of downsizing can be seen for almost every category-killer retailer, from office supplies to electronics to pets.
When downsizing, some retailers relocate to smaller boxes, and others shrink the boxes they are in. We’ve seen Best Buy shrink some of its existing boxes, carving out space for additional retail to take over its unused square footage.

This downsizing trend has found developers and landlords turning their vacant 25,000- to 40,000-square-foot boxes into spaces for two or three smaller-format merchants. In Uptown, for example, the former Borders at West Village is being turned into multitenant space for concepts like Max’s Wine Dive.

Fortunately in Dallas-Fort Worth, the back-filling of boxes has always been strong, no matter the cycle.

We’re clearly in an adjustment period, where sizes and footprints are being re-engineered. But right-sizing real estate is not only prudent, it’s also a byproduct of retailer merchandising changes that never end.

Bob Young is managing director of The Weitzman Group. Contact him at byoung@weitzmangroup.com.

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