Articles

Who’s Putting the Hype in Hypermarkets?

Hypermarkets are not a new concept. Originally developed by Fred Meyer decades ago and then perfected by Carrefore of France more than 25 years ago, the hypermarket today is best known by the highly successful Wal-Mart Supercentre. Around the world they are operated by everyone from Tesco to Target USA and the originator, Carrefore.

Despite claims to the contrary Australia has never had a real hypermarket – constructed as a well conceived customer journey that offers the customer the utmost in convenience and low price. We’ve had co-tenancies such as Coles and K-Mart or Woolworths and Big W. But not a 25,000 m2 outlet with traffic flows, adjacencies, merchandise strategies and transaction processing all created from a blank piece of paper with the customer benefit as the key driver. The closest we got was one outlet in South-east Queensland.

However, it is now only a matter of time. Having worked on these formats, I know first hand. They will usher in a powerful force that will truly own convenience (for regular household items and family needs) and lowest price for the branded goods they stock.

Consumers will win through the clear delivery of these two attributes. They will also win through choice. But retail competitors – if they aren’t capable of being one of the two market leaders in this format – will be forced to re-think how they operate and change in order to stay relevant. They will need to become famous for something more powerful than convenience and price leadership.

The good news is – despite the hype in hypermarkets – they are only one format. And as Tesco has proven in the UK, you need multiple formats to compete effectively and best serve your customer.

Further, the best profit through volume operators aggregate share in most major categories (with the notable exception of food) in most countries is no more than 40%. That leaves a very large market opportunity for specialty retailers and specialist formats.

So, how are you or how will you be differentiated in future in order to stay relevant to your customer?