Ways to growth for large format stores

Date : 31 January 2013
With online, convenience and discount becoming ever more popular channels for shoppers, we explore how retailers are working to boost sales through large format stores. 

In the year to April 2013, we expect sales through large format stores (25,000 sq ft and over) to grow by 0.7%, far below the 2.9% for the grocery market as a whole. Shoppers increasingly turning to alternative channels and the slowing rate of store openings, particularly for hypermarkets as non-food is increasingly driven online, are key to this slowdown in growth. So how are large format stores fighting back?

Refocusing on fresh

Large stores were developed to enable retailers to accommodate a broader range of non-food, but now they are keen to put the focus back on on fresh produce, with significant investment in developing compelling offers and counters that reinforce the new focus on food. While these initiatives clearly directly benefit fresh produce sales directly they also have potential to increase sales across the broader grocery offer. A stronger fresh offer is key to Tesco plans for large format store and is strongly in evidence at the new Woolwich Extra, while Asda is also enhancing the look of its fresh offer in stores such as Worcester.

Integrating online operations

Creating a seamless customer journey is a goal for all multichannel retailers and one that should benefit large format stores. Already we are seeing Asda and Tesco rapidly forge ahead with the rollout of drive through click and collect services for grocery, a facility that large format stores are best suited to support. Tesco said that 5% of its online grocery orders in the week before Christmas were fulfilled through this new service and it clearly offers much potential for further growth. However there are other ways in which online can be integrated with stores. The rollout of wi-fi and introducing more smartphone based technologies to simplify shopper journeys in-store will areas of further focus.

Daypart merchandising

With their large footprints, hypermarkets are best suited to customers undertaking a full weekly shop, but less well designed for those who want to shop quickly and for specific meals. This drawback is increasingly being remedied by altering the format by time of day to meet shopper needs. Food-to-go in particular can be made more relevant to shoppers by adjusting the offer to deliver distinct breakfast, lunch and dinner solutions and offers potential for further innovation in store design.

Rethinking the non-food offer

With shoppers increasingly using online as a primary channel for non-food purchases, grocers will need to work harder to create more inspiring non-food offers. Already there has been significant progress, particularly in categories like health & beauty, clothing and entertainment at flagship stores, but challenges remain in optimising the non-food offer across the hypermarket estate.

Want to know more about the channel?

Take a look at our hypermarkets and superstores channel forecast for 2012-2017