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Downsizing the Box & the Smaller Future of Retail

Retailers and their suppliers are about to see real and lasting change to the size of their businesses. Not necessarily in sales but in physical size.

The future is small and gray. The mothers of today’s baby boomers had an average of 3.8 children per mom…in contrast baby boomer women had only 2.1 children per mom. And, the more affluent the mother, the fewer children she is likely to have.

While there are fewer children in many families today, there are far more older households than ever before. The plentiful and seemingly endless supply of young boomers that propelled retail sales for the last six-plus decades are now graying. The living arrangements of graying baby boomers are different from their parents. Aging has become a home alone experience for many. According to the 2010 US Census approximately 30% of people over age 60 live alone and by age 65 that number jumps – revealing that more than 40% of women over age 65 live alone. This is not just an American trend; an aging Europe shows an even greater likelihood of living solo – particularly in northern Europe. For example, more than 35% of Germans over age 60 live alone as well as nearly 40% of Swedes.

So what might small and gray mean for retailers and their suppliers? Here are a few observations and recommendations for retailers and their partners:

Rethink Quantity: You may enjoy your morning cereal or even an occasional tuna fish sandwich…but do you enjoy it enough to buy in packages made to feed a family of five – for two months? Suddenly quantity regardless of price becomes a hassle, not a value.

Rethink Packaging: An older consumer, particularly one that lives alone, must manage the logistics of carrying, transporting and putting away all those big boxes and bags. Moreover, the readability, ease of lifting, opening and closing as well as disposing of product packaging is likely to become a greater differentiator in value.

Rethink Format: Big box retail formats provide space to provide big boxes and the convenience of everything under one roof. But age matters. While not the same for everyone, natural declines in physical energy and capacity to trek through acres of store to buy a few things transforms 'everything under one big roof' into a steeplechase not a treasure hunt.

Retail has always been a reflection and reinforcement of lifestyle. A smaller and older household has big implications for the future of the store. The big box store and everything in it is about to shrink. Walmart and others are experimenting with smaller formats that fit neatly into tight urban markets. Smaller stores may be equally successful in rapidly aging suburban and small town markets as well. Retail partners will have to be equally as innovative in providing value in smaller – but easy to read, easy to carry and easy to open packages.

 

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