Etail has left the future of hypermarkets in doubt

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The 1960s were a momentous decade for retail.

Carrefour Planet

In 1962, America’s first Walmart, Kmart and Target stores opened. Across the Atlantic, the world’s first ever hypermarket – a Carrefour store in Sainte-Geneviève-des-Bois, France – opened the following year and by 1968, Tesco launched its superstore concept in Crawley, West Sussex.

These events changed the world of retailing for years to come, as many shoppers were attracted to out-of-town megastores for three primary reasons – low prices, a broad assortment and the convenience of buying everything under one roof.

Fast forward 50 years and there is a more relevant format to today’s shopper that ticks those same three boxes – the internet.

In Philip Clarke’s words, big-box stores today are becoming a “less potent force” as more and more people buy non-food items online.

The growth of smartphones will accelerate this growth, albeit at some expense to traditional ecommerce. Meanwhile, pure-play etailers have turned it up a notch: last month, Amazon rewarded US shoppers with a 5% discount online for price checking products while in a competitor’s physical store.

Online retailing, although a thorn in the hypermarket’s side, isn’t the only concern. An ageing population and more single households are favouring local shops over bulk buying.

Hypermarkets must therefore adapt and accept that retail is rapidly moving online. They can be a part of this movement by streamlining and leveraging their store base – fewer stores and more services such as click-and-collect and in-store kiosks are needed to offer a holistic multichannel approach.

The key thing is giving shoppers an incentive to drive to an out-of-town superstore. This can come in the form of creating a compelling in-store environment although, as we have witnessed with Carrefour Planet, this can be too costly for a widescale roll-out. Exclusive products will play a much bigger role in the future, not only as a means of avoiding direct price comparisons but also driving shopper loyalty.

The new Shops at Target concept, which made its debut in New York last week, features limited-time merchandise from several boutique retailers across the US. This injects excitement into the in-store experience.

However, the big risk for both Carrefour and Target is loss of identity. But perhaps that’s not such a big sacrifice given the broader challenges.