Kohl's is one of many retailers today betting on smaller stores to fuel its growth.
The hope is that the smaller locations are less costly to operate, keeping only the best-selling inventory on the floor, and allowing businesses to be more nimble and open up in new markets.
Kohl's currently has 12 shops in the U.S. that are roughly 35,000 square feet, compared with a footprint of more than 80,000 square feet for some of Kohl's larger stores.
The company is meanwhile shrinking inventory and ditching fixtures in close to 500 of its largest locations, operating them like smaller stores without trimming space, before it will cherry-pick which of those stores are ripe for redevelopment with new co-tenants such as Aldi or Planet Fitness.
"An average full-size Kohl's store is doing 15 percent less business than it did five years ago," outgoing CEO Kevin Mansell told CNBC Tuesday during a tour of a small-format Kohl's store in East Windsor, New Jersey. "That was really the problem to solve for us. ... Smaller is going to be better. Bigger is not."