Do smaller living spaces mean smaller retail opportunities?
Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Refrigerated Buyer magazine
A lot has been written about the urbanization trend in countries around the globe.
The number of people living in rural areas has been on the decline for many years as populations shift to urban areas in support of jobs outside of agriculture. With urban areas come smaller living spaces. And while McMansions still represent a sizeable portion of new home construction in the U.S., urbanization and an aging population will likely lead to smaller living spaces over the decades to come.
Check out all the television shows and websites featuring tiny homes with less than 1,000 square feet — many in the 300- to 600-square-foot range. With tiny homes come tiny kitchens, oftentimes sharing space with a home office or representing a major portion of a home’s main living space. With tiny kitchens come fewer and smaller kitchen appliances, and one has to wonder how this will impact the frequency with which we shop for food as well as future demand for certain foods.
Smaller housing units will likely lead to an increase in small shopping trips as consumers match shopping behaviors with daily product demand. With limited storage capacity in many urban housing units on the East Coast, there is a reason why one-roll toilet tissue sales have thrived. In large metro areas in countries like Japan, small food trips are the norm as shoppers buy just what they need for that day’s meals.
Other important questions to ask: Will smaller housing units with limited space for perishable food storage translate into lower demand for grocery, frozen and refrigerated foods and other non-perishable items? Will the trend toward smaller homes have a negative impact on ownership of some kitchen appliances over others, thereby affecting demand for categories? If consumers go without microwaves, for example, will longer heating times for frozen and refrigerated foods prepared in conventional ovens hinder future sales?
From a retail format perspective, many small formats can thrive better in urban locations than they might in suburban or rural locations, but small trips and small packages don’t mean that big formats can’t win, too. Urbanization enables both big and small stores to flourish in support of higher demand created by population density.
Convenient meal preparation combined with the health and wellness promise opportunities for vendors to come up with an array of smaller packages at a premium price. Or just maybe we will see collaboration with an appliance manufacturer to create on-demand meals just like the Jetsons did in the futuristic ‘60s cartoon.
Do you agree that urbanization will affect food and other forms of retailing in the years ahead? What is being underestimated in how the urbanization trends will affect food retailing? What is being over-estimated?