“If you think about people living in condos, people living in urban centres, do they have cars? A lot of them don’t, so they’re not travelling to the suburbs to go to a store,” Ballantyne said.

But the strategy does have trade-offs.

Brands can’t fit their whole inventory into a more compact space, making the small stores less likely to be a one-stop shop.

When Loblaw Cos. Ltd. launched its small format No Frills stores in 2024, it cut down on product variety. Rather than 10 types of spaghetti, an executive said at the time that customers would be more likely to see five.

At Ikea, the focus is on products that make the most sense for the community.

At the downtown Toronto store, that means slender furniture that can fit into shoebox-esque condos, artificial grass and wooden deck tiles to zhuzh up little balconies and the viral inflatable PS chair, which needs just a hearty set of lungs or a bicycle pump to assemble rather than a garage full of tools. Whatever isn’t available in the store, shoppers are told to look for online.

To make best use of the space, Ikea has also cut the kids play centre and shrunk the kitchen planning and checkout areas.

For the most part, shoppers have adapted well and where they haven’t, Ikea made tweaks.

Take its plant department, for example. When the small store in downtown Toronto opened in 2022, succulents and other greenery weren’t on offer.

“But what we have come to realize is that when you live in the city, there’s a lot of concrete around us,” McGowan said.

“Having live plants and bringing nature inside is so important to the people that live here that … we decided we would try it and see how it does. Now, we have to get two deliveries a week.”

The fixes aren’t always so easy.

Ikea dumped the small format store it opened at the Scarborough Town Centre shopping mall in Toronto earlier this year, less than three years after it was launched.

It attributed the decision to shifting consumer behaviour toward online shopping and the store’s limited range of products, which it said resulted in a weaker-than-expected performance.

“That format actually wasn’t really meeting what the consumer was looking for and to be perfectly frank, if you want the full-store experience, you can go to North York,” McGowan said, referencing another Ikea that was a 15-minute drive away.

Some small stores run by Target, Macy’s and Walmart have all suffered a similar fate, but that hasn’t stopped the trend from growing.

Last week, cosmetics giant Sephora opened its first small format store in Canada. To fit into the 2,000 sq. ft. location in Kitsilano, B.C., it has stripped out the snaking checkout line and edited how many items it offers from each brand.

In Toronto, food emporium Eataly is also hanging onto the little store it opened in the Distillery District in 2025, which was initially a pop-up.

McGowan suspects they won’t be the last brand to give the small store trend a try, because retailers have to keep up with customers if they want to survive.

“If you don’t evolve and transform in ways that stay current and with the demands of the consumer, you’re not going to be able to have the longevity,” she said.

This report by The Canadian Press was first published June 14, 2026.

Tara Deschamps, The Canadian Press