Small-format stores are gaining popularity among retailers trying to get closer to where consumers live and work. Some retailers, like Macy’s, are using small-format stores to reach consumers in more urban locations. But others, like Target, are going for a slightly different demographic—college students.

• Target’s small-format location in Ann Arbor, Michigan, provides University of Michigan students with fresh produce, dorm essentials, and university-branded clothing.
• Another location in East Lansing caters to Michigan State University students, offering a similar assortment of goods.

Why it makes sense: College campuses are perfect for testing small-format stores.

• Dorm essentials often remain unchanged from year to year (school supplies, toiletries, snacks, and beverages), making it easier to assess merchandising needs.
• Major events throughout the year (back to school, the holidays, graduation) provide an opportunity for promotions and sales events.
• Over three-quarters (77%) of Gen Z adults say they make an effort to try new brands, the highest share of any generation, per February 2023 data from Morning Consult.

Who else should try it? As retailers experiment with small-format locations, they may want to consider adding colleges. Here are three retailers that could find success by expanding their small-format locations to college campuses.

1. Sephora

By the end of 2024, Sephora will operate over 1,000 shop-in-shop locations at Kohl’s stores across the US. But if Sephora wants to launch a free-standing small-format store, a college campus would be a great place to start.

• 85% of Gen Z teens prefer to shop for beauty products in-store, according to Piper Sandler’s spring 2024 Taking Stock with Teens survey.
• A college-focused Sephora store could feature beauty basics and products trending on social media, drawing in consumers doing their routine shopping and those looking to try something new.
• The in-store experience should be highly interactive and engaging, with store associates providing college-age-specific advice or product recommendations.

2. Best Buy

Best Buy announced it would open 167 small-format Best Buy Express stores across Canada. While there’s no word on a US expansion, it would make sense for Best Buy to bring the format to college campuses first.

• Best Buy opened its first small-format store in North Carolina in 2022, featuring a curated selection of products, Geek Squad services, and scan-and-go checkout capability.
• A college-based version would probably offer something similar, featuring the most popular products across consumer tech and entertainment, as well as services like Geek Squad, buy online pickup in store, and curbside pickup.

3. Ikea

Ikea is planning to open four small format stores across the US this year. However, the locations, called Plan & Order points, don’t actually carry any physical products. Instead, customers book meetings with Ikea design experts, who help them pick out products and place orders, which they can pick up at the same location at a later point.

Considering there aren’t many college students looking for design advice, Ikea would need to create a different type of small-format store to place on college campuses.

• These stores would probably focus on a selection of dorm room basics, including bedding, storage, and kitchen essentials.
• They could also serve as a pick-up location for online orders.
• Instead of focusing on design advice, the store could provide on-campus assembly or delivery services.

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