What is a hypermarket?
A hypermarket is a retail store that combines a department store and a grocery store. Often a very large establishment, hypermarkets offer a wide variety of products such as household appliances, clothing and groceries.
Hypermarkets offer buyers a unique shopping experience. The idea behind this big box store is to provide consumers with all the goods they need, under one roof. Some of the more popular hypermarkets include the Wal-Mart Supercenter, Fred Meyer and Super Kmart.
Hypermarkets can include warehouse-type stores that could also offer merchandise found in discount stores or specialty stores in one location.
How hypermarkets fit into the competitive landscape
The combination of a full supermarket with merchandise from department stores and other types of retailers can pose a highly competitive threat to local supermarkets and other retailers. Large-scale retailers have the advantage of selling high volumes of goods, which can give them greater purchasing power compared to retailers who sell goods in smaller quantities. This allows companies such as Wal-Mart to apply price pressure to suppliers, potentially obtaining discounts on goods that their competitors cannot obtain from suppliers. This allows the hypermarket company to sell goods at lower prices than its competitors.
A company like Wal-Mart poses a particular threat to its hypermarket locations because of its efforts to prevent employees from unionizing. In many American supermarkets, employees are members of unions that negotiate group benefits such as regular salary increases and health insurance. Historically, Wal-Mart has prevented such unions from establishing themselves in its stores, which has no doubt allowed the company to control its costs in a way that traditional supermarkets cannot.
The presence of a hypermarket from a company like Wal-Mart can mean reduced prices with profit margins that local competitors may not be able to maintain. This can force rival supermarkets to try to renegotiate terms with their workers or to take cost-cutting measures in order to remain viable. In extreme cases, the long-term effects of these practices can lead to the closure of competition.
Given the range of products available in hypermarkets, such a retailer can also pose a competitive threat to shopping centers that have traditionally served as focal points for the various retailers from which to operate. These malls may include a supermarket, department stores and other specialty stores that sell merchandise comparable to that of a hypermarket. The difference is that the operator and the owner of a hypermarket would see the combined sales of all these channels.
Hypermarkets are located in international markets such as Europe, Asia, the Middle East, North Africa and the Americas.