American Stores Are Shrinking

Store sizes are the smallest they’ve been in at least 17 years.

December 13, 2023

Store sizes are the smallest they’ve been in at least 17 years. “Retailers signed leases averaging 3,200 square feet during the first three quarters of 2023, the smallest size since data firm CoStar Group began tracking this metric in 2006,” The Wall Street Journal reported.

Among the reasons: a distaste for massive stores, softening demand for department stores and other big-box retailers, and an increase in small storefronts rented by restaurants and coffee shops.

It’s all part of a shift in consumer expectations. “The focus is much more on experience, much more on food and beverage,” said Brandon Svec, CoStar’s national director of U.S. retail analytics.

Staples, like toothbrushes, are taking up a lot less space as consumers are more inclined to use e-commerce, which accounts for 15% of all retail sales.

The Journal noted that overall demand for retail space is strong, with a 4.8% rate of available retail space in the third quarter, the lowest figure in the 18 years the data has been tracked.

The rising cost of rent is another factor. Retailers are prioritizing cost savings, the Journal reported. One example is Crumbl, a cookie purveyor that does not offer any seating at its 900 locations but that does offer an open-concept kitchen. “You can see our employees cracking those eggs and mixing in the sugar and the butter and the flour,” said Nathan Christensen, who works for the corporate office’s area development team to locate future bakery sites. 

“Rather than filling sprawling department stores with an array of merchandise, many retailers have started using data from online orders, social media and foot traffic analytics to customize smaller inventories to the local population. They have also bolstered store infrastructure to make it easier for customers to pick up and return items bought online,” the Journal noted.