With consumers slow to spend, retail merchandise is piling up on showroom floors. What's a business owner to do? More retailers are downsizing to smaller shops, or even letting part of their existing space lie fallow. Experts say smaller spaces are cheaper to rent, cheaper to staff and easier to change, helping keep the selection fresh. At one teen-clothing store in Santa Ana, Calif., sales increased about 23% when selling space was cut in half and a temporary wall erected to block off the unneeded square footage. "We don't want a department store feel," says Tom Shaw. "With that much product in that much space you can get lost."

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