This is something that came up in my mind not so long ago: Why Hypermarts company like Carrefour, Walmart, or Géant Casino don't invest in Specialized superstore?
Those hypermarts have thriven on a basic idea: To sell everything under the same roof. It allowed them:
- To attract more people interested in doing a one stop shopping
- To lower the operationnal costs by working on a large surface
- Securing high level of sales as they could serve most of the SKUs of people
- By the size of their store they were also able to negociate the best real estate and to capitalize on it to create malls.
But lately, a lot of people are questionning the hypermarts: Too big, to far from downtowns, they seem to turn off customers seeking for new ways to shop. Moreover, the online competition hurt the hardware categories, especially electronics.
But hypermarts have a great asset: They are able to work on all the categories, which give them a great edge:
- They master the supply chain: They are able to work on different categories with different kind of issues: FMCG with high rotations and low values, but also high value and low rotations items like TVs or washing machines
- They master the real estate: Most of the time they own large real estate, sometimes complete malls, and sometimes they work with different real estate (downtown, malls, train stations...). Therefore, they could be able to leverage even more their real estate by providing a more complete answer by proposing banners in electronics, kitchenware, cultural goods...
- They have strong purchasing powers: As they are some of the most important clients to most suppliers, they already own a great purchasing power securing high margins for their soon to come new banners. They could also benefit from their knowledge of the different categories to co create the concept.
It could also be a great way to attract entrepreneurs willing to develop new activitives in the retail business.
The best example: Auchan
Auchan is a French retailer part of what we call the "Galaxie Mulliez": a constellation of retailers owned by the Mulliez familly: Auchan (Hypermarts), Boulanger (electronics), Saint Macloud (Carpets), Décathlon (Sports), Kiabi (Clothes)...
They were able to build their own real estate company (Immochan), hence one they settled an Auchan somewhere, they could fill in the mall with their other retails. But Auchan did not go all the way to the concept. Hence, all those companies have their own purchasing agency, their own boards ,and share little of their operations. I believe that we may seen soon one retailer trying this strategy to expand its growth and positions.