If you feel like the walls are closing in around you, you're not imagining things. Retailers from Wal-Mart
Dialing for dollars
This phenomenon might be best exemplified by consumer electronics giant Best Buy
At around just 1,500 square feet, Best Buy Mobile shops are significantly smaller than the 38,000-square-foot stores the electronics king previously preferred. At the end of 2009, Best Buy had 74 stand-alone Mobile stores accounting for 112,000 square feet; its big-box namesake stores number more than 1,000 in the U.S., and take up more than 41 million square feet. According to the analysts at Trefis, revenue per square foot for these stores has fallen from about $953 in 2006 to about $885 in 2010. It will be opening 150 new Mobile stores this year while keeping big-box square footage growth to less than 1%.
More paper, less clips
Office Depot is finding it necessary to scale back, too. It's shrinking from an average of 24,000 square feet down to 15,000-17,000, a 30% to 38% decrease. More dramatic is the 5,000-square-foot concept store it's also trying out. Rival and industry leader Staples
The ever-shrinking store is not limited to consumer product retailers. Restaurants are going smaller, too. Chipotle Mexican Grill
Two for the price of one
But there's no guarantee for success by going small. Home Depot
And while it didn't change its square footage, Wal-Mart experimented with fewer products and a less cluttered appearance. The drop-off in sales that followed sent Wal-Mart scurrying to restock its shelves. It remains to be seen whether it's cutting its nose off again by committing to opening smaller stores this year that clock in at just 20,000 square feet, one-seventh the size of its supercenters. But rarely has Wal-Mart performed well when it's deviated from its standard formula.
Bubbles are forming everywhere, from social media to cupcakes. Getting small could be just another example. Good things may come in small packages, but if consumers still aren't willing to open up their pocketbooks and spend, investors are likely to get a big, unhappy surprise come earnings time.
Fool contributor Rich Duprey owns shares of Best Buy but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here. Office Depot is a Motley Fool Big Short short-sale recommendation. Best Buy, Home Depot, and Wal-Mart are Motley Fool Inside Value selections. Chipotle is a Motley Fool Rule Breakers recommendation. Best Buy and Staples are Motley Fool Stock Advisor selections. Wal-Mart is a Motley Fool Global Gains pick. Chipotle is a Motley Fool Hidden Gems choice. Wal-Mart is a Motley Fool Income Investor pick. Motley Fool Alpha LLC has opened a short position on Office Depot. Motley Fool Options has recommended a diagonal call position on Wal-Mart. The Fool owns shares of Best Buy, Chipotle, and Wal-Mart. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.