Leading retailers including Carrefour, Walmart and Tesco are being forced to rethink the out-of-town hypermarket model in the face of changing consumer habits. Since the 1970s retailers have placed hypermarkets and superstores –defined as anything over 40,000 sq. ft. by consultancy Planet Retail- at the heart of their growth plans but this is slowly changing according to the Financial Times.
Hypermarkets were pioneered by French chain Carrefour and the idea of bringing groceries and non-food goods together in a space the size of a couple of football pitches was quickly adopted by other retailers who saw it as a cost effective means of trading. Today the impact of the internet and rising fuel prices appear to be making consumers reluctant to travel long distances out of town to do their shopping.
This has led to retailers scaling back further out-of-town commercial property developments and concentrating on smaller units in urban locations instead. Walmart, which has superstores of up to 200,000 sq. ft., is now planning to open up to 100 smaller shops and is experimenting with a format in the region of 12,000 to 15,000 sq. ft. Meanwhile, Tesco recently announced that it was cutting the number of big stores it plans to open.
While an upturn in the economy may see consumers more willing to travel out of town again, structural changes to the way people shop are driving the rethink and forcing retailers to adapt. While some believe that talk of the death of the hypermarket is premature, others see it as inevitable.
Dalton Philips, chief executive of Morrisons, is one of those who think the hypermarket model has had its day. Describing them as “soulless sheds,” he predicts that they will one day be seen as “a blip on the pages of retail history.”
If Mr Philips is right will this be good news for UK high streets, whose decline has largely coincided with the flight from town? Well, while retailers may be scaling back on the size of their outlets, there is contradictory evidence to suggest that more retailers, including discount stores, are taking out of town space.
Legislation to curb future out-of-town developments was among the recommendations included in The Portas Review and the government’s failure to implement it was heavily criticised by independent retailers. However if the major retailers return to smaller commercial properties in town centres this could help attract consumers back to the high street.
Mary Portas hopes this will prove to be an opportunity for smaller businesses but she doesn’t want to see high streets dominated by supermarkets either and is concerned that the return to urban locations could lead to them “absolutely consuming the high street.” This could have the effect of driving up rents, making life equally as difficult for independents.
An ideal would be a healthy mix of independent retailers and chains offering shoppers a choice of fresh, locally sourced food and convenience. If the days of the ‘big box’ stores are really numbered this could become a possibility, providing local authorities have a clear strategy for revitalising town centres and are proactive in implementing it.
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