DSW, the Columbus-based shoe retailer know for it’s large format stores (averaging approximately 22k sf) is testing a smaller 10-12k concept. The first one was rolled out in Columbus, OH and now they have taken it to Las Vegas. Not only is the store smaller, something we’ve seen before with other retailers like Target and Norstrom, but DSW has gone all-in on interactive elements that give customers that all important “experience” that is driving change in many retail environments. For people that suggest retail is dying, the truth is that it is changing, and retailers like DSW are eagerly rolling out strategies that seek to test and capitalize on these changes. This is not about shrinking store size in anticipation of selling fewer shoes (though smaller stores are an outcome), rather it is a right-sizing that reflects the importance of brick and mortar as part of a more comprehensive omnichannel strategy. For those of us working in traditional “Main Street” environments, the result may be a softening of the retail market – and more vacancies – as retailers pull back from needing significant amounts of SF for their stores. But we must remember this is not a story about weakening of consumer demand. People are still purchasing goods, just in very different ways that are being reflected in these new retail concepts. In fact, DSW posted first quarter revenue increases of 7.3% over the previous year’s 2.0%.

While the demand for space in downtown may be softening in many places, the good news is that these smaller concepts are better fits for downtown environments because they offer precisely the kind of authentic experiences that are increasingly in demand by customers. So it should come as no surprise that clicks-to-bricks retailers such as Bonobos and Warby Parker are both in mall environments AND in traditional downtowns.

Back to DSW, they have been utilizing developing an omnichannel strategy for quite some time. In 2013 they saw the writing on the wall and invested significantly in their omnichannel efforts. Before that, DSW.com and their in-store sales units were operated separately, which frankly is still not that uncommon among retailers. Overcoming those internal divisions and enhancing their store and on-line connections was in many ways a forerunner to these smaller store concepts. The store itself is being billed as a retail “lab”, and features a ‘a 3-d digital tunnel’ that provides an immersive experience to people riding the escalator to the sales floor, a ‘shoevator’ that displays and delivers shoes to customers on elevator lifts, and arcade-like games that customers can play to win shoes.

Applying these lessons to downtown environments, it seems they are the perfect places to combine fun experiences both inside stores and in the public realm, together with retail shopping opportunities – a winning combination these days.