In the modern retail industry, multiple business models can deliver better ROI than other business models in other industries. Business models, like supermarkets and hypermarkets, are the most prevalent among them, but people always have questions about how these two business models work, how they differ from each other, and if they are easy to maintain. This blog will help you get answers to these questions and help you learn some strategies for success.
What is a supermarket?
A supermarket is a large retail store that sells a wide range of products like groceries, fresh produce, dairy products, cosmetics, toiletries, and more. In recent times, supermarkets have also started selling fresh meat, frozen foods, and canned goods to tap the growing demand for these products.
Supermarkets follow different store layouts to provide a good shopping experience to consumers. These layouts are designed in a way to help consumers pick products they need easily. Consumers usually roam around these stores with a cart and pick up items arranged in the aisles and sections based on their category. These stores provide a wide range of products at competitive prices to attract more customers. Consumers can purchase all the essential household items for an entire month in a single visit to one of these stores.
What is a hypermarket?
A hypermarket is a combination of a grocery supermarket and department store that sells a wide range of household products, like groceries, cosmetics, fresh produce, and more, but also focuses on selling clothing, electronic appliances, furniture, and other products. The range of products varies based on the size of the hypermarket. Some hypermarkets also have a cafe, spa, and restaurant to make consumers spend more time inside these stores.
Unlike supermarkets, hypermarkets are a one-stop solution for consumers who are looking to fulfill their needs for household items, clothing, electronics, and sometimes medicine in a single place.
Even though the supermarket and hypermarket models sound similar, there are some key differences between these two models that make them unique. By understanding these differences, you will be able to get clarity about how these business models are set up and operated.
Major differences between a supermarket and a hypermarket
Supermarkets are larger when compared to convenience stores and department stores; the larger the space, the more range of products.
Hypermarkets are much larger than supermarkets, as they have a wider range of products, and also have cafes, spas, restaurants, and more.
Warehouses of supermarkets can be extended display areas within the back of the store or a separate warehouse with packing locations.
Hypermarkets may have a single or multiple warehouses with different packing locations and storage locations. They also have separate cold storage facilities in these warehouses.
Supermarkets usually follow an everyday low-pricing strategy (where businesses make promises for the products all the time) or high-low pricing (starts with high pricing and decreases the prices with promotions, discounts, clearance, and similar promotions), but these decisions are purely based on the nearest competitor.
Due to their larger sales volume and the ability to negotiate with suppliers, hypermarkets usually follow the everyday low pricing strategy and provide products at a sustained lower price.
Supermarkets are usually located near residential parts of the town or city to make it easier for people to reach them for essential needs.
Hypermarkets are usually located in commercial areas or preferably on the outskirts of residential areas, considering the space needed to house the larger store.
Supermarkets may have single counters with multiple tills, depending on the size or crowd.
On the other hand, hypermarkets with departments with their own counters for billing. In this way, they can manage huge crowds.
Supermarkets aim to provide an easy and convenient shopping experience to consumers by allocating a salesperson to each section who assists consumers while shopping.
Hypermarkets aim to provide a self-service shopping experience to its consumers. Consumers can roam around with carts and purchase products on their own without the intervention of the salesperson.
Now that you have more clarity on how these differ from each other, how can you succeed in these businesses? Even if you have time, money, and talent, it is not easy to be successful in any business unless you have the right strategy. To help with this, consider the various strategies followed by several supermarkets and hypermarkets for success in their respective businesses.
Strategies for Success
The location of the store is essential when you are planning to run a supermarket or a hypermarket. The location should be easily accessible by the consumer and the vendors. Supermarkets are usually located near residential areas, so customers can easily reach the store whenever they require something.
Hypermarkets are usually located on the outskirts of a city or town because of their larger size. It will always have a larger parking lot, which will attract more customers.
A merchandise range should not be limited; it should always expand based on demand. Usually, supermarkets will have more brand choices in limited categories of products (for instance, 500 categories of products with 10 choices in each).
However, hypermarkets will have more product categories, but only the top three or top five selling brands in each of them (for example, 3,000 categories with the top three choices in each). A wide range of products across different brands and categories attracts more customers, which results in higher sales.
Proper inventory management in supermarkets can be achieved by identifying the inventory turnover ratio, forecasting future demands, maintaining stronger supplier relations, automating reorders, real-time stock auditing, and generating reports. However, the focus of supermarket businesses should be more on identifying near-expiry products, as they deal with a lot of perishable, fast-moving products and sell them at discounts. In this way, waste can be avoided and products will be sold without any loss. These kinds of discounts will help you boost customer loyalty.
On the other hand, hypermarkets should focus more on forecasting demand for products in multiple categories and shouldn’t avoid opportunities for sales. This forecasting will help you arrive at a purchase order with an adequate stock count. A correct purchase order will help you avoid losses incurred by overstock and stockouts.
There are several different store layouts followed by retail stores, including grid, angular, free flow, geometric, and much more. Supermarkets follow a single layout throughout the entire store. No matter what layout you follow, it should always guide consumers easily with board signs for an easy and convenient shopping experience.
Hypermarkets follow different layouts for different departments. For example, the grocery department follows a grid layout in which the products are placed in racks with shelves and encourages the customer to walk between racks for purchase. However, the garments department may follow a free-flow layout where the clothes are placed freely with mannequins and encourage customers to juggle between sections and make a purchase. A proper navigation system should be provided with sign boards so customers can navigate to any department easily. In both cases, the more convenience you provide, the more sales you can drive.
In the age of technology, having an online presence is a must for any business. Start with a user-friendly website or mobile app for your supermarket to list your catalogue on the internet. With this website or mobile app, you can also offer online ordering and provide home deliveries with proper delivery management software. Leverage the power of social media and run marketing campaigns to gain new customers. You can also use WhatsApp, SMS, and email campaigns to retain acquired customers.
Apart from this, hypermarkets can use this online presence combined with their parking space and provide curbside pickup. Curbside pickup is the concept of making your customers place orders online and pick them up from the designated curbside or parking lot. This concept is followed by many hypermarkets in Western countries and it adds more value to your business by grabbing every opportunity for a sale.
Invest in a proper omnichannel solution to streamline business operations like inventory control, billing, accounts management, GST filing, and more. For supermarket businesses, the ERP solution should be scalable for rapid expansion. Maintaining your supermarket business with the right ERP solution will help you keep your business healthy.
In hypermarket businesses, technology integration will not be limited to the ERP solution but will extend to security as well. Because hypermarkets have multiple departments and even some departments with self-checkout POS machines installed for customer convenience, it won’t be easy to maintain the hypermarket without proper security measures. You can improve your security with theft-deduction security cameras. Walmart has such cameras on their self-checkout machines. This security measure will help you build trust with your customers.
Customer service always plays a major role in maintaining customer loyalty. Focus on training your staff in the right way to give customers a better shopping experience. In the supermarket business, the staff usually guides the customers and helps them make a choice. Due to a larger product range placed in a smaller size, customer volume will be larger. So staff should be readily available to help the customer at any time.
In hypermarket business, customer service won’t be limited to assisting, guiding, and helping customers with decision-making. You can also provide other services to customers, like in-store restaurants and cafes, which will encourage the customer to spend more time shopping, which in turn increases sales.
Even though supermarkets and hypermarkets differ based on size, pricing, store layout, and interior design, among other things, the strategies for success remain the same for both business models. By following these business strategies confidently with the right technology support, you will be able to run a supermarket or hypermarket business successfully.
When it comes to selecting the right software for these business models, you need to first understand that the needs of these models differ. Based on the different needs, the requirements for the software also differ. Learn how the requirements of supermarket software differ from those of hypermarkets.
Supermarket vs. hypermarket software
Supermarket and hypermarket software serve different kinds of businesses, and their requirements can vary significantly.
Size and complexity of business
Supermarkets are relatively smaller retail spaces compared to hypermarkets, but the locations, product range, number of employees, and counters vary. Software that can handle higher SKUs (stock-keeping units) with multiple categories with proper staff management is required.
Hypermarkets, on the other hand, have a larger retail space with a product range that is even larger and more complex. It also has more counters for each department. Software that not only handles complex products but also manages various departments in the hypermarket in a single ERP system is required. Software that can handle multiple SKU codes with multiple categories and subcategories under multiple departments. It should also help you maintain multiple counters in each department.
Every business will scale over a period of time, but businesses like supermarkets will expand rapidly, and a new store can be opened at any time. So the software should cope with this continuous growth. Software that is portable to add a new outlet where you can maintain the SKUs of other stores or you can maintain SKUs unique to this store.
Hypermarkets can also expand over time, but the expansion may not be a new location and can instead be a new department with complex product categories. Apart from managing multiple outlets, the hypermarket software should adapt to the customizations required by the complex product categories.
More than 50% of supermarket products are perishable and have shorter shelf lives. As a part of inventory management, supermarket software should store supplier data, give real-time visibility into product batches, identify near-expiry products and provide advance notification, forecast demand, automate reorders, track supplier performance for delivery, and generate reports for improvements.
Hypermarkets also have perishable products, but the challenge here is with product categories. Hypermarkets deal with multiple product categories. Clothing is one of the product categories that contains multiple subcategories under the same item, so there is a high possibility of a stock mismatch. So, along with other features, the software must have a matrix-item-related feature.
Point of sale
A point-of-sale (POS) system helps supermarkets process transactions through different payment modes, handle a large volume of customer data, manage employees and inventory, and generate reports to provide them with data for making business decisions.
It is the same for hypermarkets, but the transactions are happening in every department here, and the same customer can do transactions in multiple departments simultaneously. For this, the software should sync all transactions happening between the departments and maintain proper data for each customer.
Supermarket loyalty programs usually focus on rewarding consumers with repeated purchases and referrals. It typically involves basic point-based and discount-based loyalty programs. The software used should help handle discounts and offers based on analyzing the customer’s individual purchase history and referrals.
Hypermarket loyalty programs are more comprehensive, and different departments offering different products will have different customers, too. Here, the software should enable you to segment these customers and provide personalized offers and discounts based on the segmentation.
Supply chain management
Supermarkets have a wide range of private-label brands from different suppliers and a smaller distribution network that relies on frequent deliveries of perishable goods. The right software should help with real-time inventory levels, streamline product categorization and labelling, track suppliers for timely deliveries and quality, manage supplier relations, and perform last-mile delivery with proper delivery systems.
On the other hand, hypermarkets have fewer brands but a lot of product categories from a large volume of suppliers. Predicting demand for this broad range of product categories is difficult, so the software should have all the features of supermarket software, along with the ability to predict fluctuating demand for different categories of products and automate purchase orders.
Reporting and analytics
Understanding sales performance, customer behaviour, and inventory levels will help you make the right decision and achieve success in the supermarket business. The software should provide reports and analytics for these three metrics in layman’s terms for better understanding.
In a hypermarket business, understanding sales performance by department, customer footfall, and customer traffic is important for decision-making. Software must be able to handle a vast amount of data from different departments and offer insights on these metrics in simple terms.
Although supermarket and hypermarket software both have certain common retail management functions, they slightly differ when it comes to warehouse management, department management, and supply chain management, among other things. Whatever business model you follow between these two, choosing the right software for your business not only depends upon the points mentioned above, but also on your budget, future expansion, and growth plans.
With all these points, you have some insight into the misconceptions surrounding supermarket and hypermarket business models and also learned a few strategies for running your business successfully.
Even with the right understanding of the business model and strategies for success, you will always need the right software to sustain the business—software that can be learned easily, is scalable, and supports omnichannel, with 24/7 customer support. If you’d like to learn more about this type of software, click here to book a free consultation with our experts and learn more about Gofrugal’s omnichannel ERP solution.