Carrefour is testing a new hypermarket concept as Western Europeans buy groceries closer to home or head to department and specialty stores for apparel and beauty products.
"The problem is that clients are not that excited by us," Carrefour chief executive Lars Olofsson told The Wall Street Journal last week. "They're either coming to us less often or shopping at supermarkets."
The article noted that traffic has been declining at Western European hypermarkets over the past several years. Europeans are buying fewer durable goods in general amid the downturn. But Carrefour also said the hypermarket concept works better in developing economies like China, Brazil and others in Eastern Europe where people are buying first homes and apartments. The aging Western Europe population has a smaller appetite for durables.
The aging population is also a factor, along with rising female employment, in leading consumers to favor the convenience of nearby supermarkets over out-of-town hypermarkets, according to the Journal. Moreover, specialty retailers, such as Darty for electronics or H&M for apparel are now offering lower prices close to home. Finally, rising gasoline prices are making consumers hesitant to drive to the distant stores.
"The hypermarket hasn't changed significantly since Carrefour invented it 47 years ago, but consumers have," Mr. Olofsson told the Journal.
The new prototype, Planet Carrefour, comes after Carrefour surveyed 50,000 shoppers and potential clients about hypermarkets over the past year. The new concept is designed to make the stores easier-to-shop but also addresses Europe's aging population.
At a pilot store in Ecully, France, one of the most noticeable changes are more clearly defined zones, such as the "organic area," "fashion area," "frozen food area," and the "leisure/multimedia area." Transparent cylinders hang from the ceiling to identify the store's sections. Slow-selling products such as bicycles have been removed and the number of DIY items have been reduced.
The Journal said the expanded beauty department is Carrefour's largest, and "the clothing section, with wood floors and pop music piped in, seems more like a fashion boutique than a grocery store." The prototype also features expanded aisles, a separate entrance for food versus nonfood shopping, as well as a sushi bar and free babysitting.
"We're choosing areas where we think we can be different and unique for our clients," said Mr. Olofsson. "Seventy percent of the time, they're mothers with kids."
Carrefour said it has been "very encouraged" by the performance of its two 'Planet' banners so far, with apparel sales having increased by 30 percent. The final version will be rolled out in its largest hypermarkets next year.
Discussion Questions: Do large-format superstores in the U.S. face similar challenges to Carrefour's hypermarkets in Europe? What do you think of Carrefour's reinvention of the hypermarket?