Small format stores: big brand, local service

Small format stores are an ideal entry point to introduce store digitalization technology into the physical shopping process.

One of the things a lot of our retail clients have been talking about recently is small format stores. Many retailers closed stores during the pandemic, as footfall declined and customers did more shopping online. Now, as normality returns, they’re beginning to re-open once again. 

However, they’re not necessarily re-opening the exact same stores. Instead, they’re using this as an opportunity to change their physical presence in our towns and cities. As customer expectations and behaviors change in the wake of COVID, retailers are adapting their strategies to meet those new demands. 

Enter the small format store. It’s physically smaller than a brand’s typical store. It’s designed to serve a local neighborhood, and focuses on the items they are most likely to need. Customers can get in, find what they need, and complete their shopping quickly and easily. Effectively, it brings the convenience store concept to big brands. 

This strategy has several major advantages. First, of course, is cost. Small format stores cost considerably less than larger locations, so retailers can open many more of them. This enables brands to establish a local presence in areas that were not previously economical. It’s also much easier for customers to get to a nearby store without having to travel. They can purchase the items they’re most likely to need in a hurry, and then go to a larger out of town store or mall location if they want to do a more extensive shopping trip. 

All this translates to four benefits that retailers want to see: increased footfall, increased revenue, increased loyalty, and increased customer satisfaction. 

It’s not just a cut-down big store 

Something that differentiates small format stores from larger stores is that they’re much more individualized and designed around the needs of each neighborhood. The layout may be different to the normal store format, and the product selection will be carefully curated.  

So for example, a store in a commercial zone may focus much more on lunch food and snacks, office supplies, and last-minute gifts. A store in a residential area may offer frozen food, school supplies, kids’ clothing, toys, cleaning products and kitchen equipment. Near a college, where there are lots of students, the product selection would be different again. 

In addition, because they serve local communities, they can offer a much more personalized service. Signage may be displayed in different languages reflecting the local population, for example. And the staff get to know their local customers, creating a friendly, welcoming shopping environment.  

This level of personalization is important to customers who are increasingly turned off by feeling like they’re just another face in the crowd at a huge store. 56% of customers are more likely to choose a retailer that offers a curated experience, they are 49% more likely to make an impulse purchase, and they will pay 16% more.  

How technology helps small format stores win 

Store digitalization addresses some of the potential downsides of the small format store, while offering an even more friction-free and enjoyable shopping experience. Let’s look at some of the ways it can help. 


  • Self checkout: make it super easy for customers to pay and go. Don’t make them stand in line for a cashier. 
  • Endless aisle: limited shelf space means limited stock, so you may not have what they want. Allow customers to browse your full product range and let them place an order for delivery or pickup. 
  • Order pickup: local stores are the ideal location for customers to collect BOPIS orders. They can buy online, and then pick up during lunch break or on their way home from work. 
  • Digital signage: with limited display space, you need to make every sign as effective as possible. Digital signage allows you to adjust the signage quickly and easily in response to real-time situations.  
  • People counter and spatial intelligence: get an accurate count of footfall and track which areas of the store are busiest. Where are customers dwelling but not buying, and where do they want to get in and out quickly? 
  • Omni visit: make it easy for customers to talk to you and establish a personal relationship. If they need to speak to a specialist at another location, you can easily route the call to the appropriate expert. 
  • Smart recycling: use local stores as a place where customers can drop off recycling. Meet your sustainability goals and provide a valuable service to the community. 

And of course, everything can be made multi-lingual to support the needs of the local community. With a simple tap or word, a device can flip from English to Spanish or French. 

Optimize each store individually 

All this technology also generates valuable data on customer behavior in each location. You can see not only what customers purchase and when, but also what they’re browsing for that’s not in stock, or what they’re having delivered for pick-up. This enables you to fine tune the inventory in each store to precisely meet local demand. 

Small format stores are an ideal way to introduce store digitalization into the physical shopping process. They’re a low-cost entry point, because an entire store can be dramatically enhanced with only a few devices.

Björn Ström

November 23, 2022