Will stores get smaller?

Best Buy, Sears, and the Gap are among the chains looking to save space however they can. Given the ubiquity of online retailing, such shrinkage is likely to continue well into the economic recovery. And for obvious reasons - no matter how big a Barnes & Noble or Bed Bath & Beyond store might be, stock will invariably be more limited than what's available on the Internet. Why not tailor the shopping experience accordingly? From the WSJ:

Many chains are concluding that their future lies in more intimate stores--like the ones showcasing Mattel Inc.'s American Girl dolls and Apple Inc.'s iPhones and iPads--that present visitors with a unique sensory experience and perhaps stock only best-selling items, directing customers online for the rest. The changes are clear in the shifting strategy of Staples Inc., which prospered after pioneering the office superstore concept 24 years ago but is having to reconsider the point of over 1,900 North American stores.

[CUT]

Office Depot Inc., meanwhile, quietly began opening new shops the size of convenience stores in December. The new 5,000-square-foot Office Depot stores are barely a fifth the size of the company's traditional locations, yet still manage to contain the office supplies and copy and mail services that account for 93% of the bigger stores' sales, said Kevin Peters, Office Depot's North American retail president. "Our box was just too big and didn't work for our customers," Mr. Peters said Wednesday. "We are reinventing Office Depot as a convenience retailer. Think CVS and Walgreens."

This, of course, is not good news for commercial landlords who will be stuck with all that space. And it pretty much kills off future development of retail shopping centers, which is bad news for the construction business.