How to Master Retail’s Multi-Format Future

It’s not difficult to assert that the future of brick-and-mortar retail is multi-format. Making it happen successfully? Not so easy.

As with all things retail, the path to a multi-format store fleet includes many challenges, unintended consequences and, yes, potentially positive surprises that lose value if they are not properly understood.

At Miller Zell, we analyze retail pain points through lens of creative pragmatism. Why? Because retail business goals for stores don’t change. You want to: 1. Elevate your brand with great customer experiences (creative); 2. Maximize revenue per square foot of store space (pragmatism).

So how do you design and deploy a variety of store sizes, layouts and experiences to optimize brand reach, store efficiency and customer engagement?

We have some thoughts.

Meeting customers where they are… and where they’re going

Customers hate stores… because they love them. The root of that love-hate relationship? As recently noted in the Wall Street Journal:

Nearly three-quarters of consumers prefer shopping in physical stores, but only 9% are satisfied with the store experience. Chief among their complaints is a lack of product variety and availability in stores, according to a 2024 survey of 20,000 people in 26 countries by the IBM Institute for Business Value.

Many customers like small-format stores. But they don’t like stores that don’t have exactly what they’re looking for. Yes, this creates challenges.

Shoppers want convenience, personalization and a seamless integration of digital and physical interactions. But don’t annoy them with too much marketing. On Tuesday, a customer can arrive at your store with specific trip missions and a grumpy attitude. On Saturday, that same customer may want to browse, chat with a spouse and make a social media post beside a high-end grill that guarantees legendary brisket.

“Nearly three-quarters of consumers prefer shopping in physical stores, but only 9% are satisfied with the store experience.”

Even with a small-format store, you want to serve such a multi-faceted customer, zeroing in on layout and wayfinding, service, product selection, inventory and checkout that deliver a majority of the time. When it misses — “You don’t have my size,” “You don’t have my color,” “You don’t have my cereal,” etc. — you offer flexible solutions that satisfy your shoppers.

Small-format stores often allow further brand reach into areas that aren’t ideal for large, big box stores, such as dense urban areas or certain types of urban malls. A smaller-format store can offer a curated product selection and streamlined service, leveraging digital tools like interactive kiosks and mobile checkout systems to enhance the customer journey.

We could make a list of the obvious differences in urban, suburban and rural locations, particularly store size and product offerings. But those differences, which change seasonally and with national trends, are table stakes.

Nimbly identifying and responding to evolving differences is the winning hand. Writing a strategic flexibility into your store development plans, including prototyping, testing, scaling and then analyzing the new data for what’s next sets a course for continual improvement.

When deploying multiple formats, retailers can ensure that every touchpoint is optimized for the local market, ultimately driving greater engagement and satisfaction. This strategic flexibility not only augments revenue streams, but also it provides an experimental platform for testing innovative concepts that may later be scaled across your brand’s broader footprint.

Unified commerce means all channels and all footprints are aligned

Data will inform your initial small-format design, product selection, staffing, inventory management, checkout paths, app integration and fulfillment-center/delivery models. And data will inform how you make additions, tweaks and adjustments.

Just as you plan before you execute and roll out, so do you plan for after you open, most notably how you manage learnings, deployment hiccups and unanticipated challenges, particularly customer and associate pain points.

To collect data on multi-format stores, you can use a variety of methods, including: point-of-sale (POS) systems, customer relationship management (CRM) software, in-store traffic sensors, video analytics, customer and associate surveys, inventory tracking systems and mobile app interactions. These tools provide insights on sales trends, customer behavior, product popularity, foot traffic patterns and overall store performance, all tailored to the different spaces of a multi-format store network.

“In the multi-format ecosystem, you recognize that footprints and customer priorities might change, but your brand messaging should remain consistent.”

Are your larger locations close enough and capable of performing as distribution centers for inventory replenishment? How seamlessly can you offer delivery and BOPIS options? Can customers check in-store availability online and request shipping of products to another store location?

Further, as you extend your brand reach and tailor your merchandise for perhaps a more specific demographic, make sure that brand consistency is maintained. Create a brand playbook that sets standards and an all-encompassing visual language — logos, colors, fonts, images, primary and secondary slogans and verbiage. 

In the multi-format ecosystem, you recognize that footprints and customer priorities might change, but your branding and brand messaging should remain consistent.

Enhancing operational efficiency

While the roots of retail evolutions are meeting customers’ changing wants and needs, smaller formats also improve revenue with cost-effectiveness, operational efficiencies, not to mention shopper data that is value for your brand as a whole.

During execution and rollout, retailers should leverage standardized design elements, modular construction techniques, centralized project management and a user-friendly SaaS logistics platform to ensure consistency and efficiency across different store formats. This modularity reduces lead times, minimizes construction costs and go-backs and simplifies maintenance, all while maintaining your brand’s core identity. It also makes it easier to adopt seasonal and promotional changes, something store associates will appreciate.

Paths to purchase are different in smaller stores, as are staffing and overhead costs. Yet they are part of a branded ecosystem. Consistency in design and functionality across various formats strengthens brand recognition and customer satisfaction and loyalty, ensuring that the brand experience remains uniform regardless of the store type or location.

This isn’t about cookie-cutter stores for smaller footprints either. Localization strategies should be written into your execution plan, and that includes offering a curated selection of products that are relevant to the local market.

In the end, multi-format retail expansion holds lasting relevance because it enables brands to scale intelligently while catering to diverse shopping behaviors.

By optimizing store footprints, leveraging technology and ensuring operational agility, retailers can create sustainable growth strategies that enhance both customer experience and business performance. The brands that thrive will be those that see physical stores not as a single model, but as a dynamic, interconnected ecosystem.