Shrinking Retail Store Sizes

A Wall Street Journal article (March 3, 2011) describes a move by Best Buy, Staples and WalMart to move to smaller stores with a smaller range of SKUs. The article suggests that the very large selection of SKUs at has made it impossible to compete on variety alone, and the ability to get small deliveries t stores effectively has increased small store efficiency. The hybrid retail store and website combination enables variety while requiring a smaller physical store size.  Thus Gap, Bestbuy, Staples, HomeDepot seem to be moving towards smaller focused stores with a lower but focused variety. Is this optimal for all retail products ? Will focused customer offerings enable a higher profitability than a portfolio attracting diverse customers ? What overhead and service levels will make such stores profitable ?

About aviyer2010

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