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Small-format stores which offer consumers more convenient and localized shopping experiences are on the rise. The trend has been gaining traction since COVID – spearheaded by major retailers like Macy's and Nordstrom, and followed by players such as IKEA, Target, Best Buy, and others.
But what impact do small-format stores have on shopper behavior? We dove into the data to explore consumer interaction with three retailers that are leaning into the small-format space: Sprouts Farmers Market, Bloomingdale’s, and BJ’s Wholesale Club.
Key Takeaways
- Since January 2022, Sprout Farmers Market has driven significant visit growth by growing its footprint through the addition of small-format locations.
- Macy’s Bloomie’s concept is successfully attracting urban social segments – in alignment with the company’s goal of offering city dwellers a more contemporary, convenient shopping experience.
- BJ's Wholesale Club’s smaller-format store in Warwick, Rhode Island has significantly boosted customer engagement and loyalty – beating regional and nationwide chain averages for both year-over-year (YoY) visit growth and share of monthly visits.
Sprouting Into New Sizes
Sprouts Farmers Market provides a great example of how a small-format expansion strategy can drive visit growth. Since January 2022, the chain has doubled down on a small-format strategy aimed at significantly reducing the chain’s square footage and environmental impact. And partially thanks to this expansion effort, Sprout saw visits to its smaller format stores increase by nearly 50.0% over the same period – helping the brand outpace the overall grocery sector in early 2024.
By focusing on customer acquisition through smaller accessible stores, Sprouts is successfully meeting the demand for convenience and sustainability. And as a pioneer in the small-format grocery space, Sprouts is setting a high bar for other grocery chains like Whole Foods and Trader Joe’s, who are rolling out their own smaller convenience-style locations. Could this mark the start of an overall shift in the grocery sector? Only time will tell.
Bloomie’s Small Format in Full Bloom
In February 2024, Macy’s announced a turnaround plan calling for the closing of about 30% of its traditional department stores, the opening of smaller versions of the company’s eponymous chain, and the addition of more Bloomingdale’s locations. Macy’s also plans the addition of at least one more small-format Bloomie’s store this year – the highly curated, small-format neighborhood concept launched by Macy’s in 2021. With three locations nationwide – and a fourth set to open this fall in New Jersey – Bloomie’s features a mix of established brands and trendy pop-ups tailored to local tastes.
And zooming in on visitation data for the Bloomie’s in Skokie, Illinois shows how the format helps Bloomingdale’s attract new audience segments. Compared to Bloomingdale’s full-size locations, visitors to the Skokie Bloomie’s in May 2024 came from areas with higher shares of urbanites – including STI: Landscape’s “Urban Cliff Dwellers”, “Seasoned Urban Dwellers”, and “Urban Cliff Climbers” segments. This indicates that Bloomie’s appeals to city dwellers – aligning with Bloomingdale’s goal of providing a contemporary, accessible, and convenient shopping experience in urban settings.
BJ’s Small Format Test: Efficiency Meets Loyalty
In April 2022, BJ’s Wholesale Club unveiled BJ’s Market - a smaller-format store in Warwick, Rhode Island that’s roughly half the size of a full-sized club location. Examining the location’s visit performance over the last two years highlights the significant impact small-format stores can have on customer engagement and loyalty.
During the first five months of 2024, BJ’s small-format Warwick location experienced consistent YoY visit growth – outperforming the chain’s already-impressive state- and nationwide averages over nearly the entire analyzed period.
But visitors also interacted with the small-format venue differently in other important ways as well. Unsurprisingly, the average visit stay at the small format BJ’s in May 2024 was significantly shorter than the average stay at BJ’s in Rhode Island and at the chain nationwide (21 minutes, versus 27.6 and 30.7 minutes, respectively). And people tended to drop by the Warwick BJ’s more frequently – with 55.0% of visitors visiting the location at least twice during the month, compared to just 37.5% in Rhode Island and 38.7% nationwide.
BJ’s testing of the Warwick small-format location proves that wholesale can be extended beyond endless roaming through enormous big box stores in search for the best value bargain. There is a clear demand for a quicker, more frequent and more efficient shopping experience in the wholesale space, and BJ’s is seizing the opportunity.
Looking Ahead
Retailers across categories are increasingly incorporating small format stores into their evolving store footprints – with promising results. How will this trend continue to play out? And will consumer preferences continue to shift towards quick, efficient, experiential, and curated shopping experiences?
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