With urbanization becoming revitalized in major metropolitan markets, more big-box retailers are looking for ways to fit into urban environments to reach this new audience. In this article, we look at the limitations and challenges of urban store formats and examine what resonates with the urban shopper.
Location and Layout
Once you’ve determined that it makes sense for your retail brand to play in an urban space, real estate and store design assessments are the next critical elements when considering an urban storefront. Whether you are taking over a heritage site, or are part of a new property development, your location needs to be assessed for foot traffic, accessibility to mass transit, and parking (if any). This will also help you determine what your operating hours need to be (typically, urban stores need to stay open much later).
Use Heritage Sites to Your Advantage
Heritage sites add a whole other layer of complexity, because you have to deal with municipalities and local planning authorities, which typically do not move at the speed of retail. However, because you are forced to maintain the integrity of much of the façade and original structure, refurbished heritage sites can be visually stunning and create a landmark in the city.
Other store layout considerations with smaller urban footprints are location and accessibility of the shipping/receiving dock, accessibility of the garbage collection area, and your back room design, which has to be ultra productive and efficient given the limited space.
Changes To Store Operations
Loss prevention becomes a more important consideration in an urban environment, exacerbated by later store hours. Store employees need to be representative of a much more diverse population—often, the more competitive labour market in an urban area means you may need to offer higher compensation to attract candidates. Product receiving and put-away will have to be done almost instantaneously as there will be limited room for merchandise to sit. All of these factors make for a different productivity model in an urban store.
Urban lifestyles and the diversity of demographics demand different merchandising assortment. For example, if you are a grocery retailer on the ground level of a new condominium building, tenants typically shop smaller baskets more frequently, and will want smaller product sizes that are easier to carry up the elevator. Meals-to-go will be more important. There will be brands and categories that make sense only for an urban market: for example, the Walgreens’ store in Bucktown, an urban neighbourhood in Chicago, has a dedicated section for bicycle accessories.
Advertising the Urban Store
Urban stores are not always destinations. The density of urban neighbourhoods means that your competitors are in closer proximity, and by comparison, shopping in a walking neighbourhood is much easier for consumers. Urban stores need to make their storefronts work harder to draw traffic. Window displays, lighting, signage and overall storefront design become very important to enticing walk-by traffic.
Urban stores call for a differentiated advertising strategy: the traditional flyer does not necessarily resonate with the urban consumer, and even if it does, your promotions and product assortment within the flyer will look very different from that of your suburban locations. Location-based apps may be useful for drawing impulse traffic, depending on your offering.
Getting Neighbourhoods To Buy-In To The New Store
Most urban neighbourhoods resist the entrance of big-box retailers. They are anxious about the face of their neighbourhood becoming cookie-cutter, and about the loss of the smaller, independent businesses owned by people who are their neighbours. Retailers entering the urban fray need to mindful of these concerns and develop a unique community investment strategy. Store managers and employees need to be more participative and visible in the community, and ensure that they are contributing in ways that are meaningful to the people who live there.
Urban stores can be beautiful and add an exciting dimension to a neighbourhood landscape. However, as big-box retailers develop urban store formats to capture new audiences, they need to approach it with all the real estate, store layout, operational and merchandising challenges in mind to carefully weigh the pros and cons.