Large supermarkets are changing strategies as customers begin to shop online instead of going to hypermarkets.
The days of massive stores are over, according to Tesco Extra’s chief executive Phil Clarke. The market share of the U.K.’s biggest retailer is now at its lowest level since 2005. Tesco had been beating rivals by opening huge stores across the country, but that strategy may now be hurting it, according to The Guardian.
Industry insiders have said that it was a mistake for any supermarket, incluing Tesco, to open stores larger than 60,000-70,000 square feet since it’s a challenge to fill them with enticing products when many things sell better online.
Online sales have more than doubled in the last five years, according to consultancy Verdict Research, a fact that supermarkets have not ignored. Tesco and rivals Asda, Sainsbury’s and Waitrose all offer groceries and non-food online with “click and collect” services. They have been able to attract new shoppers to buy a massive range of fashion, homewares and electricals online, some of which does not appear in their stores.
Most major supermarkets are adding small local stores to take advantage of the trend toward more frequent small shopping trips but many are still unwilling to give up on their addiction to new physical space. Supermarkets were working on the development of 40 percent more new space in the first half of 2011 than they were in 2008, according to property company CBRE.