big box storesWal-Mart (WMT). Best Buy (BBY). Home Depot (HD): From sea to shining sea, big-box stores dot the landscape as pervasively as mile markers on the highway. And like those nondescript numbered signs, they give no reliable indication of which U.S. city, town, or state you're actually driving through.

But your days of living in "Generica," that land of asset-bubble-fueled cookie-cutter consumerism, may be drawing to a close.

Smaller is Spectacular

If the number of big-box names now studying smaller store formats offers any indication, big is no longer beautiful in retail.

Former behemoth bookseller Borders is wrapping up its liquidation as we speak, and shrewd competitors such as Britain's Tesco and the United States' Trader Joe's, both nimble small-box retailers, have pushed other renowned retail giants to diminish their footprints.

Wal-Mart's strategic outlook now includes far more Lilliputian sites, where its online customers could utilize drive-thrus to pick up merchandise. (Would you like an order of Cheetos with that?) Last spring, Wal-Mart management revealed plans to debut "hundreds" of smaller stores over the next three years.

Target (TGT) has experimented with pop-up shops in some markets. These tiny, temporary retail locations function only for the holiday season or some other limited-time event, carrying only a handful of hot merchandise. Then one day, poof -- they're gone.

Best Buy has been working on daintier footprints of its own by reducing its stores' square footage. It's also talked up plans to open hundreds of small Best Buy Mobile shops that focus on smartphones.

Meanwhile, Best Buy Marketplace, which will include third-party sellers, represents the retailer's most recent competitive volley against online giant Amazon.com (AMZN). It sounds nothing less than desperate on Best Buy's part; even if Marketplace does increase its online sales, it'll hardly do much good for the company's own bricks-and-mortar business.

The ups and downs of the last decade have made American consumers far more frugal today. They've also proved that big isn't always beautiful, especially when your company's growth depends on someone else's asset bubble. If these big-box retailers ever want to recapture the growth they once enjoyed, they may have to start getting small.

Motley Fool analyst Alyce Lomax does not own shares of any of the companies mentioned. The Motley Fool owns shares of Wal-Mart and Best Buy. Motley Fool newsletter services have recommended buying shares of Home Depot, Wal-Mart, and Amazon.com, as well as creating a diagonal call position in Wal-Mart.




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361 Comments

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phpoling

Totally lacks of researching for this article. You forget one big box store Lowes.. Famous for terrible customer services and more..

September 15 2011 at 2:03 AM Report abuse rate up rate down Reply
1 reply to phpoling's comment
Fred

agreed...lowes blows

September 16 2011 at 11:10 AM Report abuse rate up rate down Reply
ssdwyer115

This article lacks research. Most of us in the business world, understand that most retailers have a 10 yr. span. This is not new to any research. Study trends, and you will learn. The past is always important to understand the future.

September 14 2011 at 7:27 PM Report abuse rate up rate down Reply
1 reply to ssdwyer115's comment
Doug Girard

10 years huh?? Thats why Wal Mart first opened thier doors in 1962?? Talk about not doing your research. And you probably could have found out that litttle shred of FACT by googling it.
Shame.

September 14 2011 at 10:44 PM Report abuse rate up rate down Reply
2 replies to Doug Girard's comment
ssdwyer115

Yes, you moron they have been opened for many years, but again you didn't do YOUR research. They stayed in small towns throughout the south and midwest. It wasn't until the early 1990's that they started expanding. Why don't you think. What a loser. You should probably ask how they knew to expand? They studied the demographics. Now, go back to school.

September 14 2011 at 11:52 PM Report abuse rate up rate down
Doug Girard

For one, I am schooled.
For two, I have worked in the retail industry for 25 years.
For three, I have been in management.
Four, I have been involved in back office procedures and have seen first hand what bad management does to the books.
Five, get YOUR facts in order before you just throw something up on your screen. It is you who is highly moronic.

September 15 2011 at 12:36 AM Report abuse rate up rate down
Lady Marmalade

I found that walmart for all it hugeness is pretty limited in it's selections in there grocery dept. I will go there for some itmes. but for the most part I find WalMart stores way too big and overwhelming, and I never grocery shop there. The same goes for Home Depot, too big, can never find assistance. Even some of Targets stores are way too big. My main complaint for WalMart- there horrible, disgusting parking lots.

September 14 2011 at 6:27 PM Report abuse rate up rate down Reply
The Kudej's

When was the last time you were able to ask a clerk in the hardware aisle at any big box store what item/product you need to do a home repair? We have the luxury of going to our local family owned hardware store and asking any question and they know the answer and they don't charge you for it. It doesn't matter if you are buying a 2 cent washer and you need to know how to install it or a 200 dollar pump. The kid at a big box store isn't going to know a widget from a gizmo let alone how or where to install it. The benefit of family owned small business can't and never should be underestimated.

September 14 2011 at 6:24 PM Report abuse rate up rate down Reply
ROBERT

big box stores like homeless depot and lowes are very important to stay BIG . many times i have gone to the smaller competitors only to have to go to the bigger stores cause they have most of all the hardware and plumbing supplies i need. no one wants to go to many different stores to get what they need for remodels and construction. but lately the big hardware stores have been poorly stocked and has run out of the MOST BASIC hardware / plumbing supplies. so if they go smaller they would suck even HARDER than they do now.

September 14 2011 at 6:18 PM Report abuse rate up rate down Reply
triron96

One of the reasons that Home Depot isn't as popular as they were is that a certain CEO who left HD to wreck Chrysler made several critical and destructive changes before his departure. Home Depot no longer carried the large variety of hardware and accessories that they once did. Thus they were no longer a "one stop"store. You had to go elsewhere to complete most of your DIU (do it yourself) projects. And HD began carrying large margin high ticket items, and slowly consumers discovered that they could no longer expect to find real value for their dollar at HD. Too bad those were the qualities that made the chain grow in the first place. Moral, avoid CEO's who are more interested in short term growth to build their bonuses rather than building up the business for long term survival!

September 14 2011 at 6:15 PM Report abuse rate up rate down Reply
debbie hunter

I think that what this article is saying is there is no need to have big box stores with everything under the sun. They are watching smaller stores who focus on what the people today in this economy can afford. I am sure they are losing out on exspensive cost to run and hire people to work in a huge big box with just a hand full of customers. They will down size and put in handful of what consumers think are essentials and they will be back in the market and out of the red. I think what I dislike the most is that Wal-mart claims to be so" RED BLOODED AMERICAN" but yet they support our products being made from other countries. I see in the near future the first store who backs up what they sell as 100 percent american will not only out beat all the money hoggers like the big box stores...but bring back our country its pride and raise our economy!!!

September 14 2011 at 6:08 PM Report abuse rate up rate down Reply
ButterFly

I like shoping at Wal*Mart, Best-Buy & Home Depot and yes I agree that creating smail stores, but in area that have high un-employment, this I think will create jobs.

September 14 2011 at 6:01 PM Report abuse rate up rate down Reply
Rockwell

But this strategy would cover more immediate simple necessary purchases, the the little crumb market Walmart has left in the past to smaller mom n pop shops closer to residential areas.

My guess is that they would still keep some large big box stores for the big ticket items - like the 2 grand tv, 1.5 grand laptop.

September 14 2011 at 5:05 PM Report abuse rate up rate down Reply
chucks.trains

I wouldnt mind if all the Wal Marts did close. I do not shop and will no again. Starting in the parking lot, you have to work your way through a maze of minivans that dont really look to be street legal. If you do find a place you have to walk around all the cars parked in the fire lane. Then when you walk in the smell in the air is horrible. Then you are somewhat greeted by Moses himself. You look around and think if there were sand on the floor it would be just like a third world nation in here.Then look at the shelves with everything the Chinease think we need this year. Most of this crap wouldnt last until you get home. So walking over to the grocery side you look at some meat. Then you notice a sticker that reads injected with 12% saline solution for weight. Hmm im not paying $3.99 lb for saltwater. When you walk up front there are 57 cash registers and only 2 are open. Even the self checkouts seem to be closed most of the time. I know I can ring up my purchase better than the one behind the counter that is just waiting on quitting time to get back to the single wide.
This is what I see when I have been in. I prefer to shop on line and have it delivered and possibly pay a little more than to deal with the wal mart and how the other half lives.

September 14 2011 at 5:05 PM Report abuse rate up rate down Reply
1 reply to chucks.trains's comment
karmarind

LOL When you ring up your purchases YOU are working for Walmart, EXCEPT you are doing it for FREE and taking some one else's job for FREE...LOL That way you can go back to your DOUBLE wide Mr. Above Single Wide.... LMAO

September 14 2011 at 6:07 PM Report abuse rate up rate down Reply