Mote: u201cThe most successful retailers will always be experimenting with the ideal size for their stores.u201d

DALLAS—Finding the right size for bricks-and-mortar stores can be daunting, but it’s largely a function of experimentation, says Clay Mote, a partner with Dallas-based retail brokerage Venture Commercial Real Estate. Mote serves as master broker for Northern Tool + Equipment, a family-owned retailer of high-end tools and equipment that began as a mail-order catalog and now has more than 85 locations in 18 states. spoke with Mote about helping retailers discover the right sizing formula, as well as the right mix of bricks-and-mortars, online retailing and catalog sales. With all the challenges bricks-and-mortars face today, how do they come up with just the right size for their stores?

Mote: The most successful retailers will always be experimenting with the ideal size for their stores. If you look at world-class retailers such as Walmart and Target, each has had to continually evolve their sizing strategies as the customer and products change. In the last 10 years, we have seen them open supercenters ranging from 150,000 square feet to 225,000 square feet, and we have also seen them both experiment with smaller concept stores like the new 20,000-square-foot Target Express store.

Northern Tool + Equipment has gone through the same process, with earlier store sizes averaging 25,000 square feet and more recent stores of 16,000 square feet. With vast amounts of customer behavioral data and customer segmentation strategies, as well as improved distribution channels, retailers can now create stores that are much more efficient, with a better product mix for the customer. After all, a quality brick-and-mortar experience allows customers to have the right choices instead of unlimited choices. Why is it important for retail brokers to change their mentality regarding how they deal with clients, from a “doing deals” mentality to a relationship-building one? How is this done?

Mote: Retailers, today more than ever after the recent economic downturn, are looking for a broker that will be a partner and a consultant, someone they can really trust. They do not want to work with a broker who is trying to sell them on a deal. Sure, you may be able to do a couple of deals, but when those stores don’t perform, everyone is responsible. In today’s climate, brokers just trying to “do deals” may soon find themselves without any clients.

Savvy retailers today are demanding that we give advice based on data, including other retailers’ sales in the market, a detailed understanding of growth potential, traffic patterns and studies. Good brokers today understand that successful relationships mean they may be advising the retailer not to do a deal as often as they are to do a deal. There will always be brokers who get this and those who don’t, but the younger generations understand the concept pretty well. What strategies can retailers today use to achieve the right balance among bricks-and-mortars, online and catalog sales?

Mote: The great thing about Northern Tool + Equipment is that they were a mail-order catalog long before they became a bricks-and-mortar retailer. When the Internet revolution came, NTE already had the warehousing and shipping equation down to a science, so the Internet was a relatively easy transition for them as they converted the printed catalog to the Web.

NTE also had years of data telling them who their target audience was and where they lived and worked, allowing for targeted store placement. Creative retailers like NTE can use a mix of traditional circulars, direct mail, email blasts, Facebook, Twitter and invitations to store events such as product-demonstration days to drive customers both online as well as to bricks-and-mortar locations.

Retailers who have strong distribution channels and retail stores in place can offer Internet and catalog customers free shipping when the item is delivered to the store. NTE calls this their free store delivery program. This can result in large savings to the customer when shipping bulky items, such as a generator or pressure washer, and provide a great opportunity for the bricks-and-mortar side of the business. Getting the customer in the store allows that customer to see and connect with the human side of the retailer. It also offers the retailer a chance to get real-time information on what the customer wants, which may turn into another selling opportunity. What other trends are you noticing in the retail sector?

Mote: Here are some of the trends I’m seeing:

  • There is a lack of available retail space across all size ranges.
  • Lease rates and pricing on land have increased dramatically in the last 12 months.
  • More and more anchors are self-developing and owning, and in a lot of cases, doing sale/leasebacks rather than having developers develop on their behalf.
  • Landlords and tenants seem to be working together to create win/win deals more so than in the past.
  • Retailers seem to have gotten comfortable for now as to how the Internet will affect their businesses and are prepared to move forward on expansion.
  • Retailers continue to tweak the size of space needed as technology continues to allow them to carry less inventory.
  • Grocery stores are expanding at a rapid pace.