Dive Brief:

• A new study appearing in the journal Marketing Science suggests that products see greater sales increases and brand awareness in small stores compared to large ones, according to a news release.
• Researchers measured alcohol sales data from Systembolaget, a government-run chain of liquor stores in Sweden, between 2006 and 2011. The stores are in four different sizes, ranging from extra large to small, and have controls in place that ensure fairness to suppliers and wholesalers. 
• The study found that as products moved through Systembolaget’s four store sizes, beginning with extra large, sales increased 1.2% in large stores, 2.1% in medium stores and 6.2% in the smallest stores. The authors attributed the increase to the larger share of total sales that products get in smaller stores.

Dive Insight:

All retail contracts are coveted in the eyes of manufacturers and wholesalers, but large stores tend to be prized for their broad assortment of products and proven ability to draw customers.

According to this study, companies should put in the extra effort to land shelf placement at small format stores too. This research shows sales increases at these stores are larger thanks to increased visibility and a more curated selection.

On the one hand, it seems obvious that suppliers would see larger sales increases when their products have less competition on shelves. However, those increases are larger than some might assume. Gaining distribution in two small stores, the authors note, is a better way to drive sales increases than gaining one large store. The impact on brand awareness, not just top line sales, could be significant.

These findings are notable in light of the increase in small format stores across the country. As consumers increasingly prize quick shopping trips and limited assortments, retailers like Kroger, Target and Meijer are rolling out smaller stores. At the same time, convenience and dollar stores are increasing their food and beverage selection, broadening opportunities for suppliers.

For CPG companies struggling with sales, small stores could be a way to generate more impactful returns as well as increase brand awareness. Grocery stores, meanwhile, should note small formats’ ability to drive sales and use product and merchandising insights from them across all of their formats.