Retailers in India are downsizing their stores to meet the evolving demands of consumers who increasingly prefer online shopping. Driven by e-commerce and quick-commerce, this shift towards smaller, more focused store formats mirrors a trend already underway in the United States.
Leading this change in India are companies like Shoppers Stop, Decathlon, Spencer Retail, and Ikea. For instance, Shoppers Stop is focusing on smaller ‘HomeStop’ stores with curated premium products to enhance customer experience. Kavindra Mishra, Managing Director notes, the retailer is closing 31 larger stores due to declining foot traffic and changing consumer habits.
People want things faster and are not willing to travel much, explains Anand Ramanathan of Deloitte, highlighting the impact of e-commerce on traditional department stores. Retailers are adapting by being more accessible in numerous locations.
Using smaller stores as local hubs, Spencers Retail is emphasizes on fresh products and leverages loyalty programs to boost sales. These stores also function as e-commerce fulfillment centers, integrating online and offline strategies. Their recent entry into quick-commerce with the ‘Jiffy’ app further supports this strategy.
Pointing to the double-digit growth of smaller retail spaces, Bharat Mimani, BCG, says this reflects a significant change in retail real estate.
Also adopting this model are Decathlon and Ikea, with Decathlon planning to invest significantly in smaller stores, some as small as 100-120 sq m, for quick purchases. Ikea is also moving towards smaller formats, reducing their typical store size significantly
Emphasizing on proximity, rental costs, and supply chain efficiency as driving factors, Mimani states, smaller formats are here to stay, especially in metros, He acknowledges, larger stores might still be viable in Tier II cities for brand establishment. However, the trend clearly indicates a preference for smaller, more accessible retail spaces in urban areas.
