Reduce the size of hypermarkets – then what?

The new boss of Carrefour announced late January the launch of his “Carrefour 2022” transformation plan. Media attention to the cost-cutting aspects of the plan missed the overall ambition: to make Carrefour a truly omni-channel distributor and a world leader in the “food for all” transition.

What can we glean from this transformation plan and the impact it might have on shopping centres?

Whether those who predict the looming demise of hypermarkets agree or not, Alexandre Bompard says that he is “absolutely convinced that [hypermarkets] still present immense value.”

Though the announced measures do not call for store closings, they are nonetheless essentially defensive moves: reduced surface area, concentration on food, better management and a shift of five stores to management lease contracts.

Is it no more than downsizing?

True, backtracking to smaller stores with fewer departments would correct some of the excesses of the mad chase for square metres that has produced saturation in customer catchment areas. But it will take more than that.

And Alexandre Bompard intends to do more: “Customers should have the same experience instore or online. That is how we will win customer loyalty for our brand. But first we must strengthen our different formats and organise them in an omnichannel approach.”

The hypermarket has its place in this architecture of points of contact. But its attraction will not stem from size alone, rather from…

From what?

Beyond the question of downsizing, other announcements will no doubt follow about the way Carrefour intends to revamp its hypermarket concept, in practical terms. 

If they do manage to achieve these transformations, what will be the consequences for shopping centres with a Carrefour anchor store?

For those that belong to Carmila, the real estate branch that owns some 200 shopping centres with a hypermarket in France, Spain and Italy, this could represent a fabulous opportunity to confirm their positioning in connection with a revitalised Carrefour brand and its new mission of ensuring the “food for all” transition.

Strong integration of the hypermarket in the shopping centre offers two notable advantages:

1. In the context of a single brand and omnichannel strategy, where shopping arcades logically have their place, the marketing strategy shouldn’t be cause for much debate.
2. In the event of restructuring, with a transfer of space to the shopping arcade, any discussion will be settled “in-house” within the group. 

In other places, the downsizing of the hypermarket could prove complicated.

If the hypermarket sheds space, what is to become of the surplus? Bring in medium-sized stores? The space configuration does not always lend itself well to such retailers. Enlarge the arcade? But if hypermarkets are considered too numerous or too large, isn’t the same true about arcades?

Even if a credible project emerges, it would only be the start of an arduous process. In the majority of cases, where the hypermarket belongs to the operator and the arcade belongs to one or several other owners, this type of restructuring will lead to endless – and often vain – discussions.

The three other possible reconfigurations announced by the CEO of Carrefour —outlets, “dark stores” to fill online orders, or Promocash stores (open to professionals only) — could provide part of the solution. But will that suffice to give the affected malls a new lease on life? 

Such reconfigurations could preserve the value of the asset without affecting the real estate of the hypermarket. Downsizing, yes, but accompanied by constructive solutions. So, it’s fairly good news, though it will now demand a lot of imagination to make it work.