Retailers Boost Growth Strategy by Expanding Store Sizes: Tanishq, Lifestyle, Zudio Lead Shift

Retailers are fundamentally altering their growth plans by prioritizing larger store formats, a significant pivot from their recent focus on compact, high-efficiency outlets. Brands like Tanishq, Lifestyle, and Zudio are now investing in expanding their physical footprint to enhance product discovery, boost overall customer spending (basket value), and achieve deeper penetration across various product categories.

Lifestyle, a fashion and beauty retailer under the private entity Landmark Group, is scaling up its store formats. Its renovated Phoenix Marketcity, Whitefield store in Bengaluru now spans 52,000 sq ft. The company typically operates average store sizes of 40,000–45,000 sq ft in metropolitan areas, while stores in smaller towns are around 20,000–25,000 sq ft. Devarajan Iyer, Executive Director & CEO of Lifestyle, explained that the intent is to create immersive store environments where clusters of products come alive for consumers, encouraging immediate purchase decisions or exploration of alternatives.

Jewellery retailer Tanishq is also aggressively adopting larger store formats. While most Tanishq stores previously averaged around 3,000 sq ft, renovated outlets now start at 6,000 sq ft, with an average trending towards 8,000 sq ft. These expanded spaces allow for the introduction of new categories and premium experiences, such as an entire floor dedicated to high-value wedding jewellery. Arun Narayan, Senior Vice-President at Tanishq, noted that renovations are used to add new facets and categories, significantly enhancing customer experience and driving store growth.

Zudio, a mass-fashion chain operated by Trent Limited, exemplifies this trend clearly. Pratik Dantara, Chief Investor Relations Officer and Head of Strategy at Nexus Malls, highlighted Zudio's evolution from 6,000–7,000 sq ft stores stocking only fashion to 9,000–10,000 sq ft outlets that allocate 20% of the space to beauty products, aiming to be a one-stop shop for consumers. This trend varies by market: larger stores are sought in metro and Tier-1 cities, while retailers might opt for more numerous smaller stores in Tier-2 cities.

The underlying strategy across fashion, jewellery, beauty, and lifestyle categories is consistent: larger stores are believed to foster better product discovery, enable stronger brand storytelling, and ultimately drive improved sales performance (throughput).

Impact

This strategic shift towards larger stores is expected to positively impact the financial performance of retailers. Increased space allows for greater product visibility and variety, potentially leading to higher average transaction values and improved customer loyalty. Companies that successfully execute this strategy, enhancing customer experience and sales, are likely to see improved revenue growth and profitability, which could be reflected in their stock performance. Rating: 7/10.

Difficult Terms

Expansion Playbook: A company's strategy or plan for growing its business, in this case, by opening more or larger stores.

Large-format stores: Retail stores that occupy a significant amount of physical space, allowing for a wider range of products and enhanced customer experience.

Compact, high-efficiency outlets: Small retail spaces designed to operate very effectively with minimal resources and maximum sales per square foot.

Product discovery: The process by which customers find out about new or desired products they might want to purchase.

Basket value: The total monetary amount a customer spends in a single shopping transaction.

Category penetration: The extent to which a company's products are available and sold within a particular type of product category.

Metro markets: Large, major cities that are centres of commerce, culture, and population.

Marquee stores: The most important, prominent, or successful stores in a retailer's portfolio.

Glass ceiling: An invisible barrier that prevents certain individuals or groups from advancing beyond a certain level in a company or profession.

End-of-tenure: The point at which a contract, such as a lease for a retail space, expires.

Mass-fashion chain: A retailer that sells trendy clothing and accessories at affordable prices to a large audience.

Throughput: The rate at which sales are made or customers are served in a retail environment.