Mercator: emotional hypermarket
When people talk about the hypermarket format what comes to mind are ceiling high shelves, the mass of the product and a rigid focus on low price. However, there is a different approach and type of the hypermarket, which works not only with price but with good assortment and additional values - service, unique products. On the development of the hypermarket concept for Mercator in Slovenia, which is performed by Jos De Vries The Retail Company, we wanted to tell in this article.
For the better understanding of the concept a short remark about the features of the retail market in Slovenia and the formula itself. The former Yugoslavian republic has always been in a special position being located closest to Italy and Austria, under the strong influence of culture and technology from Western Europe. After the turbulent 90-ies the country began to change very rapidly and absorb the European approach to building a commercial business. Today Slovenia is a country with a 2 million people population, a small, very competitive and fast growing retail market. Over the last 15 years the market didn´t show not only chains of all formats but also a good infrastructure and the European approach to business. Hypermarkets have already started to open 10 years ago and chains gained considerable experience in working with this format. 
Mercator - is the leading chain in Slovenia with a 45,8% market share, and one of the most important players in the countries of former Yugoslavia. The company owns approximately 1.200 stores and works in multiple formats - hypermarket, supermarket, discount and «c-store». In addition to food products lines the chain operates in the direction of non-food, selling cosmetics, electronics, items for home decor, clothes. The chain has unique experience in the absorption of 25 retail companies and a good annual growth in sales (about 18%) and turnover of 2.06 billion euro a year. 
Today the chain operates 17 hypermarkets with trade area from 5.000 to 12.000 m2. Thanks to the experience of working with food and non-food category the concept of a hypermarket is formed and is effective. Mercator has a clear strategy for business and brand development. The chain relies on the development of loyalty programs, develops new services - such as Healthy life club. For the format of hypermarket an experience in working with food as with non-food - textiles, a group of «home decoration» makes a special advantage. Today those hypermarket chains are leading, which effectively manage the non-food part of the assortment, organize effective seasonal purchases, promo.
In 2006 Mercator rebuilt one of its hypermarkets and for the development of lay out, design and communication concept, invited the company Jos De Vries The Retail Company. Jos de Vries The Retail Company is one of Europe´s leading shop concept builders. This Dutch based retail specialist has experience by having developed different type of retail concepts in over 30 countries. In the hypermarket market for example new hypermarket formats have been developed for Italian Ibercoop and German Globus. 
The trade area from Mercator has increased from 6000 to 8000 m2, the shop demanded a new, modern concept and lay-out, but given the already existing infrastructure. The chain wanted to make the supermarket more up to date, comfortable, increase the proportion of own label products in the volume of sales. Additional 2000 m2 were added on the right side of the building and were scheduled for placement of non-food goods and home decoration. Area of fresh products - fruits and vegetables, breads and pastries, meat, cheese – became the center of the hypermarket. We believe such a lay out plan is effective, since these product categories are most profitable for the chain and the main focus to be made on them, giving most passable areas. High quality products - gastronomy, tasty bread, meat and fresh fish - this is what the customer looking for. For the grocery, or as they are known in Europe - must articles - water, beer, toilet paper, the customers will always reach, so they are appropriate in the back of the room.
The main idea of hypermarket design has been to create an emotional component. Usually a hypermarket - is a rational world, focused only on the lowest price. But in order to attract the customers today you need more than just a price. Quality products, their good presentation, tasty food, warm, emotional atmosphere - this is what helps to attract the customers from growing middle class - which is the most prospective target group. To provide a sufficiently large assortment of 60 000 titles, we have used in the design different colors and materials to make a clear zoning and allocate each group of goods. We proposed to use the entire height of the room, placing visual elements with bright focus, specially made for Mercator photos along the perimeter.
The zone of fresh food was underlined by special lay out and equipment, correct display of goods, we used a multi level presentations. This was particularly appropriate for the department «fruit & vegetables». It's no secret that the Slovenes prefer to go to the market on Saturdays for this category of goods, and to involve them in the supermarket the quality of products was not enough, a better atmosphere was needed- baskets, decorative presentation of the vegetables, the correct light. Marketing strategy of a hypermarket - shop for everybody, so you can find here all the most up to date. The most modern trend is the bio-and eco products. Not accidentally this hypermarket set aside nearly 200 m2 for this category of goods. It is important to be first, when there is a clear tendency to care about health and commitment to eco-products, such as in Europe and the U.S., where consumption of this group is growing at 10% per year.
We would like to give some tips for companies that design hypermarkets:
1. Create 3 - 4 «worlds» in hypermarket
a. Non-food (World of Fashion)
b. The world of fresh products
c. Dry grocery (discount world)
d. Seasonal and promotional products
2. Make a non-food products a store profile
3. Make sure your staff is present and seen in all departments. Employees are part of the sales process
4. Be a specialist and universal at the same time
5. Make a visit to the store an adventure, create an excellent navigation system
6. Create a dynamic atmosphere – organize every 2 weeks new discounts, promotions, and tasting and the client will return to you! Do you have questions? Want to know more? Write to us maurice@josdevries.eu or check our website: www.josdevries.eu
The authors of this article are Irina Bolotova and Bob Damen.. Irina Bolotova is retail strategy consultant and Bob Damen is creative director with Jos de Vries The Retail Company
Thoroughly prepared, one day the formula has «dropped» prices. Some products become 10-15% cheaper and some even 30%. For other retailers this was totally unexpected, and they were forced to low their prices to retain the customers. In general, the war caused all players loss of 5% margin. Also, this has led some formulas, like the hero of this article - chain COOP, to changes and the development of a new concept. 
Historically, that changes in the market coincided with changes within the Co-operative retail. Chain COOP is included in the group Superunie. The chain acquired company Codis, owner of two modern Distribution Centers. This allowed to reconstruct the logistics and to increase efficiency of work. Now the chain has eleven thousandth DC with fresh products, which handles about 60 thousand boxes (this is the unit of measurement) weekly. The second DC provides the chain with dry grocery and non-food products. Thus, the two DC serve stores, located al over the country with a 97.1% order fulfillment. Delivery of goods made in carefully marked transport trolleys, with address information not only of the store, the goods, but also indicating a number of shelves. Fresh products get into the stores before 8 am, where they immediately going into the sales area and are placed on shelves. By the way, thanks to advanced logistics warehouse and office space in the store occupy only 15%: the goods are not stored in the warehouse, coming exactly according to the order and on time, as for trolleys - folded it does not need much space. 
The best of both worlds 
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