Hypermarkets and Mass Merchandisers: Strategies to Remain Relevant

Pressure on large store formats in developed markets set to intensify

Shifts in consumer behaviour resulting from unfavourable demographic trends and the rise of internet retailing have led to more challenging conditions for hypermarkets and mass merchandiser operators. As these challenges are expected to become even more pronounced, efficiency gains will take precedence over expansion to maintain profits, especially in developed markets, encouraging a focus on innovation and new concepts.

A more targeted approach towards expansion in emerging markets

Although emerging markets still offer vast expansion opportunities for international hypermarket operators, they will need to be more targeted, as several markets, notably BRICs, are moving towards maturity, with highly challenging conditions in first-tier cities and local players making inroads against global retailers, thus intensifying competition.

Optimal store size: more compact units with flexible store concepts

Although expansion opportunities in developed markets are limited, potential for opening new stores with smaller sizes of up to 7,000 sq m remains, through flexible concepts allowing hypermarkets to be more closely adapted to each catchment area and to target some locations close to residential areas enabling store visits within busy lifestyles. Reduced store sizes with smaller non-food areas may also boost sales per sq m.

Innovations in store format and assortment

Hypermarket players aim to retain the format’s relevance, especially against internet retailers, by specialising in fresh food and a few core non-food food categories, often using smaller stores. Beyond retailing, they will seek to offer more services targeting single and small households, notably including young adults and elderly shoppers.

Boosting multi-channel synergies to gain advantage over pure play internet retailers

Multi-channel strategies will increasingly focus on synergies between store-based and online activities and offset the decline in non-food sales, notably by boosting click-and-collect delivery options, including drive-through locations. Retailers will seek other uses for selling space no longer used for non-food, notably to fulfil online orders, and bolster supply chain efficiencies to gain a price advantage against pure play internet retailers.

What this report includes

• Top-level strategic analysis of how major consumer trends will influence global markets
• Consumer insight
• Impact across all relevant consumer markets
• Unique graphics and case studies
• Key market snapshots
• Accompanying presentation to synthesise main findings

Why buy this report

• Identify factors driving change now and in the future
• Understand motivation
• Forward-looking outlook
• Briefings and presentation should provoke lively discussion at senior level
• Take a step back from micro trends
• Get up to date estimates and comment