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‘History is awash with retailers coming to grief’

News that Forever 21 is looking to downsize its first UK store just 18 months after launch has raised questions about store size versus productivity.

History is awash with retailers coming to grief because they believe if they have stores twice as big they will be twice as successful. However, retailers have to double the footfall and maintain the same conversion rates, which rarely happens.

One of the biggest retail myths is that more space equals more product and therefore more sales. The reality is there are many smaller-footprint stores that generate a higher return on space via a product assortment that aligns to the customer, demonstrates a point of difference and reinforces the brand message. Such spaces afford the retailer a clear strategy on the use of store sizes.

Flagship stores showcase the brand and generate PR and marketing, but the store’s productivity may not be best in class for the retailer.

Not many retailers understand or measure sales per square metre or store footfall conversion to understand store performance.

The main reason for this is a lack of available data. Unless a store’s productivity is considered from the outset, retailers may find themselves in a Forever 21 ‘downsizing’ situation.

  • Richard Traish, Senior partner at management consultancy Kurt Salmon.

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