Tesco and rivals turn against hypermarkets as internet shopping takes over | Business | The Observer
Has the behemoth had its day? After years of relentless expansion, the UK’s biggest retailer, Tesco, last week saw its market share fall to the lowest level since 2005. The supermarket gained the upper hand over its rivals by ambitiously opening ever-larger stores across the country. That strategy may now be coming back to bite it.
As internet shopping becomes ever more popular, hypermarkets and enormous warehouse-style stores are beginning to look as futuristic as the woolly mammoth. When you can order online for delivery to your home, why spend money on expensive petrol to drive to a cavernous store and drag the kids along aisles as long as a football pitch in search of items that may not be in stock?
In January, when Tesco delivered a shock profits warning, chief executive Phil Clarke indicated that the days of massive new stores were over. He told reporters: “Do you need to build large hypermarkets in the UK when the internet is taking so much growth in electricals, in clothing, in general merchandise?”
Industry insiders say that it was probably a mistake for any supermarket to open stores over 60,000-70,000 sq ft, as it is becoming a challenge to fill them with enticing products when many things sell better online.
Most supermarkets do not offer a particularly inspiring shopping experience or well-informed staff. Their main selling points are convenience, reliability and price. The internet has ratcheted up competition on all those measures, particularly in music, electrical goods, books and even clothing.
Of course supermarkets are not alone. Retailers across the UK are realising that they have too much physical space. The economic downturn, which has dampened retail sales growth, has only exaggerated a strategic shift towards the internet.
Strange Random Shopping Quote:
Buying something on sale is a very special feeling. In fact, the less I pay for something, the more it is worth to me. I have a dress that I paid so little for that I am afraid to wear it. I could spill something on it, and then how would I replace it for that amount of money? – Rita Rudner
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