Dave McMahon Weighs in on Retailers’ Shift to Smaller Formats in CNBC

As big-box retailers adapt to shifting consumer habits, many are turning to smaller, more personalized store formats. Companies like Ikea, Target, and Macy’s are downsizing their traditional spaces to enhance customer experiences, reduce costs, and optimize revenue. Pepperdine Graziadio faculty member Dave McMahon explains that the shift is driven by changing shopping behaviors, with most in-store trips now starting online.

Smaller stores not only reduce non-revenue-generating space but also create a more intimate shopping experience. “If merchandised properly, the smaller format stores can create a more intimate shopping experience while increasing the revenue generated per square foot,” McMahon says.

While some shoppers enjoy the convenience of compact stores, others miss the variety of larger locations. McMahon notes that success lies in balancing curated in-store offerings with robust online options to meet diverse customer needs. As retailers experiment with innovative strategies, they aim to strengthen their relationships with shoppers and thrive in a rapidly evolving market.

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