Downsizing, downsizing, downsizing......

Retailers are all starting to downsize. Suddenly we are discovering we have too much store space. Next is about to launch small format stores, B&Q is about to free up space in sheds, Mothercare is reducing overall number of stores.

But how does a retailer downsize? We agree that as footfall reduces and e-commerce sales expand retailers will need to reduce the store footprint.

Options are:

• Treat stores as service points, reduce space and reduce the range of stocked items


• Keep only out-of-town stores, where footfall is guaranteed


• Reduce total number of stores, and give up physical presence in marginal areas

These are all tough choices. Almost all these choices will involve revenue sacrifice in order to maintain profitability, in the face of falling footfall.

Whatever the choices, the overhead costs retailers have been used to will have to be dramatically reduced.

We will see an increase in IT outsourcing, Finance outsourcing, sharing of logistics, and even sharing of outlet space.

There is a looming inevitability.........