December 8, 2012

Retailers test new store formats

Their strategies include opening temporary, small-footprint or even more specialized outlets.

The Baltimore Sun

At GameStop Kids, shoppers might find plush "Super Mario" book bags and "Angry Birds" hats mixed in with the "Lego Star Wars" and other kid-friendly video games, a mix meant to attract both serious "gamers" as well as those who have never played but want some gift-giving advice.

HOLIDAY RETAIL
click image to enlarge

Brian Hunt of Middle River, Md., shops at GameStop Kids in White Marsh Mall in Nottingham, Md. “It’s hard to find Mario stuff,” he said. “Most of the game shopping we do is for the kids, and this is kid-friendly.”

Lloyd Fox/Baltimore Sun/MCT

That's by design, said executives of the video game chain, which is testing out the new kid-focused format as a way to appeal to new crowds of shoppers during the busiest time of year.

"Our business grows exponentially during the holiday season," said Bob Puzon, GameStop's executive vice president of merchandising. "We just thought about some of the business and opportunities we could expand upon. There's just an opportunity with a kids environment. We're trying to take care of the consumers who thought (GameStop) was only for hard-core gamers with more kids' products."

Retailers striving to remain relevant are experimenting with new concepts this holiday selling season. Specialty retailers such as GameStop are opening even more specialized stores, targeting specific segments of shoppers. Online-only sellers are opening brick-and-mortar locations -- both temporary and permanent. And big-box retailers such as Target, Best Buy and Toys R Us continue to pursue small-footprint formats that can fit in mall or urban settings.

The holidays are prime-time for retail testing because more people are shopping and willing to check out new outlets for gift-giving ideas.

Consumers can expect to see more of such trends, said Alden Lury, a retail strategist with Kurt Salmon Associates in New York.

"When looking across all segments, retailers of all types are focused on more closely connecting with their customers, and that has a lot to do with testing new store formats," Lury said.

The goal, he said, is to create "more compelling store experience for the customers."

While the recession has driven some retailers to find ways to reinvent themselves, "a big piece of it is the change in the way customers shop," said Mike Gatti, a senior vice president of the National Retail Federation.

"With mobile devices and more online shopping happening, retailers are looking at how do they utilize their stores the best way they can," Gatti said. "Is my store the right size? And would it do better with smaller stores? ... Another piece is how do we differentiate ourselves so that we drive more traffic, bring more value to our customers and give them a better shopping experience."

Companies that sell products mainly online or through other retailers have found that creating a branded, physical presence "is a way of creating a buzz, raising brand awareness, creating a connection with the consumer and giving their consumers and new consumers a chance to try out what they have to offer," Lury said.

That was the idea behind 30 "pop-up" Microsoft stores. Microsoft had said it wants to give store customers hands-on experience with its products they might not get elsewhere. Kevin Turner, Microsoft's chief operating officer, first announced the idea for the pop-ups earlier this year as a way to expand the company's retail presence in new locations and complement Microsoft's nearly two dozen permanent stores.

In other cases, big-box stores are going small.

Toys R Us began opening Toys R Us Express stores in malls and other shopping centers during the 2009 holiday season, taking advantage of mall vacancies created when KB Toys went out of business. The Toys R Us Express stores grew from 90 in 2009 to 600 in 2010.

Best Buy began testing Best Buy Mobile, a small store format centered around the idea of enhancing the experience of mobile phone shopping, with nine temporary stores in New York in 2006. The initial mix of stores included five of the small-format stores and four within existing Best Buy stores.

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