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Is the secret to growth getting smaller? The trend at WalMart, Target, and McDonald’s

WalMart has been shrinking the size of its super centers by about 25 percent, and now it's developing much smaller stores for urban markets.  Target is piloting new stores that are a fraction of existing ones - as little as one-third the size.  Target's strategy for its new urban stores is about making the store fit the site. 

McDonald's just rebuilt a restaurant in my local area.  The remodeled building has fewer square feet than the original, but boasts increased customer capacity.  It can deliver more meals with less mass.  The company saves on building, energy, and maintenance costs, while actually increasing its ability to handle sales. 

Across the Atlantic in Madrid, my colleague recently visited a McDonald's that has returned to the concept of a walk-up restaurant.  Why use building space for your customers and spend money to heat, light, and clean that space when customers are willing to stand outside under an awning? 

What's behind this trend of smaller is better?  Target and WalMart, having hit a wall in suburban and rural areas, are exploring growth strategies in urban areas, where real estate is a constraining factor.  But there's something larger driving this trend.  They're also exploring the idea (like McDonald's is) that it's possible to generate more revenue with fewer costs by investing less mass in delivering their products.  In an urban environment, the cost of using mass for a building is much more obvious than in a sprawling suburb.  In a world with an ever-expanding population and increasing resource use, the costs of using resources is also becoming more and more obvious.  It makes sense to find solutions that deliver more value with less mass.  

Other businesses would serve themselves well by considering this question of space and scale early in their design.  Is it possible to tie up less mass and generate a greater return on your investment?


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Seeing waste as valuable resources: an example from WalMart

Wal-Mart labels each box with an associated cost and a reminder to reuse.We talked recently about pollution as nothing more than “lost” resources.  We're seeing growing evidence that more people and businesses are thinking about waste as valuable resources, from a device that uses dog waste to power a light, to the example in this photo from a local Wal-Mart store.  All of the shipping boxes being unpacked at the store have the label: "RETURN FOR CREDIT. EACH BOX COSTS THE COMPANY ABOUT $0.80." 

Not long ago, packaging was seen on the receiving end as a disposal problem.  Now it's regarded as part of a whole system.  It's also viewed as a valuable resource.  When resources appear in a form we can't readily use (including what we might call pollution or waste), we sometimes don't recognize their value.  But we're now seeing a broadening view of what constitutes a valuable resource.  The key is understanding form - the idea that a resource might be in the earth, or something that's been imported into our economic system and re-arranged into some useful tool, or some by-product of our industrial processes that's been "thrown away" or emitted as waste - and realizing that each of these resources, regardless of form, is fundamentally the same.  The next step lies in garnering the most value, or most benefit, using the least amount of resources.

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