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Small-format stores are in vogue.

NEW YORK--Some industry observers see the plight of Best Buy Co. as evidence that the era of big-box retailing may be coming to an end.

Best Buy has announced plans to close 50 of its big-box stores this year. At the same time, it will open another 100 Best Buy Mobile small-format stores in the United States, with the aim of having 600 to 800 such stores by fiscal 2016, up from 305 today. The retailer also plans to remodel some of its big-box outlets to reflect a new Connected Store format, which emphasizes mobile devices, services and a multichannel experience.

Best Buy plans to test its Connected Store concept in San Antonio and Minneapolis/St. Paul. In those markets the company expects to reduce its big-box square footage by nearly 20% while increasing "points of presence" by more than 20%.

The company has also rolled out what may be the ultimate small-box outlets--vending machine-like Best Buy Express kiosks that have been installed in airport terminals and other locations.

Large stores are not expected to go away anytime soon. Walmart, which plans to open as many as 100 smaller-format stores in the United States this year, is also adding up to 150 Supercenters.

But when it comes to variety, even the biggest physical store cannot match the range of products available online. And the success of such small-box discounters as Family Dollar Stores Inc., Dollar General Corp. and, on the food side, Aldi and Sav-A-Lot show that consumers find low prices equally compelling in a more compact store located closer to their homes. For mass retailers, it seems, bigger is not always better.

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Date:May 14, 2012
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