My Pre-pandemic Pathology of “Formatitis”

As U.S. retailers accelerate their plans to create spin-off retail brands and deploy thousands of new store formats, a highly opportunistic condition is incubating and few will be immune to its impact. It’s time to take a closer look at how this imminent outbreak will impact the retail landscape.

Although “small” and “urban” are the location-based terms most often used to describe these emerging formats, they fail to fully explain the diversity that is taking shape. With that in mind, I’ve created the following three segments that sort out the pathology of the coming "formatitis" pandemic:

1. Proliferation - Penetrating new markets with smaller footprint stores and fighting scale with scale.

Variations: Smaller footprint stores are where urban, and – let’s stop leaving this out — rural areas, really do come into play. Walmart’s Express and Target’s City Target concepts fall into this category but don’t assume these stores will be “mini” versions of the mother ship. Although consumables will no doubt take center stage, it‘s hard to predict which categories, brands, and even packaging sizes will gain ongoing placement and, as these concepts get fine-tuned, assortments will continue to mutate.

Aftermath: Drug retailers, dollar stores, and hard discounters, such as Aldi, will feel the heat. Greater store density will intensify price transparency and more neighborhoods will become “walk-able.”

2. Specialization - Capturing new niches and saturating key categories

Variations: Expect to see an influx of separately-branded specialty retail concepts plucked from retailers’ existing private brand portfolios (e.g., Loblaw’s Joe Fresh apparel) or opportunistically launched as stand-alone brands (e.g., J.C. Penney’s Foundry Big & Tall).

Aftermath: Spin-off specialty stores will change the existing specialty store landscape and potentially siphon sales away from more generalized competitors. Mega retailers will deploy these concepts at will and decide how far they will spread as they go along (rather than committing to rollout plans up-front). Most spin-offs will initially focus on the retailers’ owned brands; however, just as J. Crew, Gap, and other private-brand-based specialty chains have begun to augment their assortments with select national and licensed brands, the same may eventually hold true here as well.

3. Localization - Driving loyalty by closely connecting stores with their communities

Variations: These concepts may be highly customized, as with the all-out, hyper-local approach used by Whole Foods — where each store has a local “forager” who pushes for local products and a community advocate whose role is to immerse the store in all types of neighborhood activities — or formatted, as with the newly-refined "palettes" that are guiding Starbucks' new store designs ("Heritage," "Artisan," "Concept," and "Regional Modern").

Aftermath: Much has already been stated about big box retailers putting “mom-and-pop” stores out of business; a rush of highly-efficient, hyper-localized concepts could pose an even greater threat to business as usual and woo a new generation of shoppers. I often talk about the reality of retailers being brands. In the future, individual stores will become their own brands and the concept of “retailer-as-brand” will continue to evolve into “location-as-brand.”

Retailers that go local will favor suppliers that engage in their own version of “community service” by integrating localized insights into a community-specific context. Without a doubt, each retailer’s localization and community engagement perspective will guide everything from event marketing to POP displays.

Consider yourself inoculated!

Want to explore what these and other retail dynamics mean to your retail positioning? Contact me directly at