By Tom Ryan
While mall-based apparel retailers in 2009 might have looked to outright close weaker stores, the current year is seeing many reducing the size of stores in a bid to improve store productivity.
After undergoing a store-closing barrage last year, mall landlords are said to be more open to accepting downsized locations if it can help the store's chances of staying open beyond the lease expiration date, according to an article in The Wall Street Journal. This marks a reverse from the ethos of the nineties when more apparel chains were building more and ever-bigger stores.
"During the '90s era, everybody wanted a bigger box," Kay Krill, AnnTaylor Store's chief executive, told the Journal. "Now, all of us are trying to get out of those bigger boxes."
AnnTaylor is reducing square footage at its new namesake stores by a third. "I like productivity," Ms. Krill said.
At Gap Inc., some locations where the company has multiple formats (e.g., GapKids, Gap Body, conventional Gap store) are being consolidated into a single store.
Gap's chief financial officer Sabrina Simmons told the Journal that some of Gap's stores run up to 18,000 square feet but most can be just as productive at 8,000 to 12,000 square feet.
"Quite frankly, it's just not as positive of a shopping experience as a smaller box that's a more intimate experience," Ms. Simmons added.
The move comes as average sales per square foot at American malls fell to $401 at the end of 2009 from a peak or $454 in 2007, according to research firm Green Street Advisors Inc.
Beyond reducing costs, smaller stores may help merchants key in on winning merchandise calls. For instance, Paul Lejuez, an analyst at Credit Suisse, believes the Gap's larger stores forced it to broaden its offerings for a wider age range and confused its image. But buying more shrewdly for the smaller stores also presents challenges. Matthew Katz, head of the retail practice at consulting firm AlixPartners, also noted that having less inventory space forces retailers to speed product flow from suppliers or come up with new ways of storing and displaying merchandise.
Discussion Questions: Is the trend toward smaller stores a positive or negative for mall-based apparel stores? Are greater numbers of small stores a positive or negative for malls?