Retail Chinn-wag: Carrefour evolves hypermarkets into planets

In a regular new column, Verdict retail analyst Simon Chinn, assesses the latest grocery store formats and concepts around the globe

Simon Chinn: new life for hypermarkets

Carrefour has recently launched a rejuvenated hypermarket concept Carrefour planet, opening two pilot stores in Ecully and Venissieux in France at the end of August. The new concept showcases the retailer’s aim to turn around the ailing format, which has seen its sales slide in recent years. Its demise has been exacerbated during the recent downturn as consumers chose to shop locally and curtailed discretionary expenditure, which particularly dented non-food sales at hypermarkets.

The planet concept marks the next evolutionary step for the hypermarket, a format Carrefour invented almost 40 years ago and, from initial perceptions, it is a step in the right direction to restoring growth at large format stores.

The old concept of ‘everything under one roof’ has been reinvented with a clearly segmented offer consisting of three core departments – non-food, fresh food and dry grocery. Within these splits the offer has been further departmentalised to improve the shopping experience. In total there are eight specialised areas in the store including a market area for fresh food, a beauty area and baby area.

In addition to overhauling its existing hypermarket offer, the new planet concept incorporates a number of innovative concepts for Carrefour such as a children’s crèche; in-store events, including food tasting and cooking lessons; all of which aim to draw customers back to stores on a more regular basis.

Another development has been the allocation of some 1,800sq m of floor space in the non-food section to ranges that are changed frequently to reflect the season and latest trends. This will allow Carrefour to adapt its product range and assortment much more effectively; and it will also act as a good footfall driver, encouraging customers to go to the store to check out the latest offers.

About half of the store is dedicated to non-food categories. However, the company has rationalised its non-food offer, stripping out underperforming categories and focusing on those that fulfill the needs of its core customer base; 70% of which research shows are women.

The launch of the two flagship stores is significant as it illustrates Carrefour is actively seeking to improve sales at its core format, which brings in around half of the company’s turnover. However, whether Carrefour can effectively replicate these impressive stores on a much wider scale is another question. Carrefour has yet to reveal the actual cost of each of these makeovers at the trial stores but it is likely to be quite high. Taking high remodeling costs into account, Carrefour has over 200 hypermarkets in France, not to mention hundreds of hypermarkets in the rest of Europe. To implement the planet format on its entire European store estate will be costly and time consuming. While Carrefour has successfully phased out underperforming formats in the past, such as the Champion brand, which was replaced with the Carrefour Market banner; there was not a dramatic difference between those formats, whereas the planet concept involves an almost complete overhaul of the old hypermarket format.

What we are likely to see is the planet concept used at a number of the group’s core stores in large European towns and cities, initially on a trial basis. In addition to the two trial stores in France, it already has a further two pilot stores in Spain and one in Belgium underway. While a complete overhaul of its entire European hypermarket estate is unlikely in the near future, it is not unreasonable to expect some aspects of the planet concept to be put in place at other stores over the next year. One of the most compelling features of the new concept is that it segments the store into separate zones or universes, which can be incorporated and adapted to different store locations. This level of flexibility will prove invaluable to Carrefour in breathing new life into a waning channel.