Shop Front

Are supermarkets becoming the next shopping centres?

How are supermarkets diversifying their offering to attract even more shoppers and in-store spend? We explore what offerings are working and what other high street retailers can learn from this.

Tom Randall Written by Tom Randall on 19 Sep, 2019

With the recent headlines we’d all be forgiven for thinking the brick and mortar experience is all doom and gloom as online channels have forced the closure of long-standing high street businesses. As the online versus brick & mortar debate rages on, it is supermarkets that remain a necessity for shoppers and are therefore in a more stable state. However the big four still face a challenge; the threat of the discounters and convenience stores. As a result, it is no surprise that they are enhancing their non-food offering alongside the grocery offering in physical stores, to continue to attract shoppers and increased spend.

Over the last few years, we have seen supermarkets begin to adopt an idea that has long been the lifeblood of department stores - concessions. Sainsbury’s, for example, reported that adding Argos outlets to its stores had boosted trading last year. This year, the supermarket has attempted to further disrupt the retail market by challenging the beauty market, not only adding over 1,500 new products but more interestingly trialling concessions of The Fragrance Shop in two stores. Health & Beauty has long been a strong category for supermarkets due to the convenience of picking items up whilst doing the weekly shop, but the grocers have never put so much emphasis behind them. Sainsbury’s actually deciding to make it a focal point in some stores should help to increase shopper consideration and perception for the category at Sainsbury’s.

But ask Tesco and they will tell you the concession model needs to be carefully considered. In 2016, they sold Harris + Hoole coffee shops, originally bought to turn the weekly shop into more of a leisurely experience. The reality was that shoppers saw it as a corporate coffee chain masquerading as a small independent and it didn’t sit well. It was an interesting decision to trial given that they had Costa concessions in some stores too. In the same year, they also cut ties with their healthy food and drink offering NutriCentre, as it experienced a big loss. However, they say practice makes perfect and the insight that lead to the Sainsbury’s Argos partnership is driving Tesco to find their right fit, most recently trailing concessions of high street fashion store Next, in what seems a move in direct competition with their own clothing brand F&F.

Diversifying services on site isn’t a new concept. Supermarkets are champions at this; whether it be incorporating key cutting & shoe polishing, opticians or cafes. But as supermarkets look to add to their offering, it certainly opens the door for new and unique in-store campaigns that can encourage cross-selling categories and increased basket spend. For example, an in-store summer campaign at Sainsbury’s can be significantly heightened with Argos’ range of outdoor BBQs and furniture. Equally tracking the transactions through the same tills and loyalty cards helps to target customers based on not only their FMCG purchasing, but also their non grocery items too.

The diversification and enhancing of the in-store shopping experience is not a trend unique to supermarkets. To help fight against the volatile retail landscape, high street retailers are doing the same. Primark is the perfect example of a retailer known for cheap, fast fashion. Their stores span multiple floors, incorporate barbers, beauty salons and some of their biggest stores now have themed cafes such as Disney in Birmingham and Friends in Manchester. Topshop are another great example of a retailer using flagship stores to become an ‘all-under-one-roof’ style retailer, increasing dwell time and ultimately shopper attention and spend.

The trend is clear, retailers are having to look for new ways to add value to the shopper’s in-store experience, if they want to combat the ongoing struggles with large high street store formats. Finding the right partnership is no easy task but once they do, they mustn’t rest on their laurels. Developing that relationship with the shopper will be vital to overall success in years to come. As shopper marketers we need to recognise the new opportunities that this can bring to our brands, retailers and shoppers.

Over the next few years we will see further store-in-store trials across a range of retailers, but for the shopper it will be interesting to see how they maximise their partnerships at the final point of purchase, looking to seek out more than just revenue from the rental space.