Brick-and-mortar stores serve a wide variety of functions, Placer.ai points out in a new report. They can range from operating as a sales channel to supporting product and brand discovery, facilitating fulfillment and reverse logistics, and building customer engagement and loyalty. Bigger isn’t always better when it comes to fulfilling these roles, which is why many retailers are now incorporating small-format stores into their fleets. 

“There are plenty of reasons why companies have been leaning into small-format stores,” Placer.ai says in its Going Big by Going Small The Small-Format Advantage report. “Retailers can tailor these small-format stores to target a specific demographic, create a personalized shopping experience, or experiment with a new brand direction.  

“Small-format stores can also serve as fulfillment centers for click-and-pay shopping and as a location for returns, all while fostering brand awareness and customer engagement. And thanks to their smaller size, these stores can help companies expand their reach in urban centers and other highly priced real estate markets while lowering overhead costs.”   

This report analyzes four leading retailers that are shrinking their store size to see how smaller stores can affect visits, dwell time, and loyalty—and finding success by doing so.