Some large retailers are modernizing their stores by sizing down, adjusting their real estate for the new ways people are spending. Sprawling sellers are condensing their physical footprints, with both the companies and shoppers getting more bang for their buck.

Americans spend an average of $333 a month at big chain stores, according to Empower research, compared with just $106 at local small businesses.

Getting more hands-on

Since opening its flagship location in Stockholm, Sweden, in 1965, Ikea is known for sending shoppers down a long and winding road to browse for home furnishings.¹ This spring and summer, the Swedish chain will open eight new-format shops across the U.S., all smaller than its traditional maze-like stores.²

Seven spots will use Ikea’s new “plan & order points with pick-up” concept, where the intent is more around customers planning and ordering customized arrangements rather than setting off on a treasure hunt.³ The key emphasis will be on collaborating with store associates around complex home projects like bathroom renovations, kitchen remodels, and closet organization setups. These smaller places will also lean into Ikea’s e-commerce strategy, allowing customers to pick up online orders shipped to the store. The chain made $1.9 billion in e-commerce sales in its fiscal year 2024.⁴

The largest U.S. retailer by sales in 2024, Walmart, has also been aiming to get more mileage out of its smaller stores.⁵ In May 2024, the company opened two new Neighborhood Market stores — one each in Florida and Georgia — which cater to grocery needs.⁶

Read more: Average cost of groceries by state

Measuring in with 57,000 square feet of sales floor and pickup and delivery space at each location — compared to Walmart Superstores that average 178,000 square feet — these newer stores also feature wider aisles. The extra space accommodates typical in-store grocery shoppers, along with workers picking items off shelves for both Walmart’s e-commerce offerings and for other third-party services.^7,8

This commitment to customizing stores for how Americans shop stood out in Walmart’s latest earnings report released in February (covering its fourth quarter of fiscal year 2025):⁹ The company’s U.S. e-commerce sales jumped 20% compared with the same time a year ago.¹⁰

Adding items to a virtual cart for pickup or delivery can be a worthwhile trade for many: Empower research finds that more than 2 in 5 Americans (41%) think outsourcing household tasks gives them a better work-life balance.

Building on brand partnerships

In October 2024, Ulta Beauty announced plans to open around 200 net new stores over the next three years.¹¹ Some of the debuts could expand on the company’s existing integration with another big retail name.

Ulta has 500 “shop-in-shops” within Target stores, and their placement has been paying off. Across all Ulta locations, about 95% of the company’s total sales is driven by members of its loyalty program. Members that have connected their Target and Ulta accounts have been spending two times what Ulta’s average member does.¹²

Read more: Shopping with all senses: How brands build sales beyond looks

Grabbing valuable real estate

A smattering of store closures across the industry has unlocked doors for chains wanting to expand or diversify their real-estate portfolio. With the vacancy rate in U.S. retail space sitting at only 4.1%, mid-size spaces are being snatched up quickly. At a February auction of 250 former Party City locations, 148 leases were secured by discount chains Dollar Tree and Five Below.¹³

Another name in the off-price sector has been seizing the opportunity: Burlington put $28 million toward acquiring 64 locations from Bed Bath & Beyond, in addition to getting previous outposts from Big Lots.¹⁴

Burlington has been slashing its store sizes by 70%, now opening spaces that measure around only 25,000 square feet. The chain’s leadership has said that while the smaller formats are pricier by the square foot, they’re becoming more profitable than its larger stores and are more centrally located around other popular retailers and shopping centers.¹⁵

Trading up

As consumers continue to spend — notably on their food and pets — one constant for the retail industry seems to be change.