Proximity retailing : the trend for 2021
2021 is here, being an odd year. The beginning of the year is marked by the continuity of the pandemic worldwide. This fact has accelerated many trends that already existed before COVID-19 such as e-commerce, omnichannel, proximity retailing, etc.
As we saw in our article about proximity retailing, the major retail players continue to bet on proximity stores in city centers:
LIDL · PORTUGAL
In 2020, the German food chain has invested more than 8 million euros in the opening of three proximity stores in Lisbon, Portugal.
TAMBO · PERU
Tambo, a Peruvian food company, opened its first store in 2015. Five years later, it already has 400, all located in Peru. Tambo is committed to small-sized local supermarkets (from 70 to 120 m2) with convenient locations that can easily adapt its product catalog to the specific needs of each location. Thus Tambo adapts to the profile of a buyer with little time, of average resources who live in urban centers.
DELHAIZE · BELGIUM
The Belgian food company plans to open 30 new stores between 2020 and 2021. The vast majority of them will be proximity stores. After the chaos generated by the COVID-19 pandemic, Delhaize has decided to open more proximity stores since these have shown during the pandemic that they can better adapt to the needs of each location: opening hours, opening restrictions based on the surface of the store, adapt the product catalog quickly, etc.
ESSELUNGA · ITALY
The Italian food brand opened its first proximity supermarket in 2019 under the name La Esse. In that way, they want to invest 300 million euros in the opening of 12 local supermarkets between 2020 and 2021. Since the COVID-19 pandemic is still here, the chain wants to offer its customers greater convenience by opening smaller locations but closer to its customers.
SPAR · NETHERLANDS
After the pandemic, SPAR has started to open proximity supermarkets called Spar City Small aimed at young urban audiences with a range of products adapted to each moment of the day. In addition, the chain has inaugurated an 18 m2 store format where customers enter one by one ensuring social distance.
NIKE · NORTH AMERICA, AFRICA, MIDDLE EAST, AND EUROPE
Nike plans to open 200 small-format Nike Live stores in North America, Africa, the Middle East, and Europe in 2021. They have already tested this format in Los Angeles with great feedback. The concept is based on taking advantage of the benefits of digital to increase growth and innovation.
CASINO · FRANCE
The French group has already opened 67 local supermarkets and plans on building up to 200 of these during 2021. The initiative is based on the increase in sales that this small store format has generated: more than an 18% increase in sales after the 2020 lockdowns.
CARREFOUR · TAIWAN, AND SPAIN
The French group Carrefour has acquired in 2020, 224 proximity stores in Taiwan.
In the same way, they have bought the Spanish Supersol food chain with 172 stores, most of them, small supermarkets.
WHY DO BIG RETAIL PLAYERS BET ON PROXIMITY RETAILING?
- Expand audience range
In the vast majority of European cities, almost half of the people do not have a vehicle, which means that these people do not visit the macro centers that large brands such as Ikea or Leroy Merlin have on the outskirts of cities.
For example, in Paris, only 37% have a car. In Spain, the average is almost 50%.
Therefore, large retail players know that the opening of a store in an urban area is equivalent to expanding its visibility and accessibility for urban customers, who are usually young and old people and tourists.
- Product catalog adapted to local needs
Local stores in the food sector have more experience in this new format and know that it is easier to adapt the product catalog to the specific needs of each location. For example, the North American Target knows this, which is why it adapts its product catalog in locations close to universities. For instance, college students probably don’t need diapers or maternity clothes and are interested in electronics products, take-out food, or snacks.
- More constant sales flow and visits
The location of the stores is a very important factor and big brands know it. Hence, they open stores in high-flow arteries. A store located in a busy location will have sales throughout the daily opening hours as well as every day of the week.
However, the big-box retailers in the suburbs tend to have a very low number of visitors during the week, while the weekend is usually crazy. Ikea suburban stores have tens of thousands of visitors on a weekend or opening day.
On the other hand, high street stores have a continuous flow of public that is very well suited to the smaller format of these stores that could not accommodate hundreds of visitors at peak traffic.
- Greater accessibility and capillarity
Today, time is a very precious commodity. Not everyone is willing to visit suburban stores far from the center. Even stores like Ikea are designed to spend a whole day in their facilities since they even have restaurants at very cheap prices within the store.
For this reason, opening smaller stores but in different urban spots brings closer to customers, stores that used to be far away in the past and discriminated against a significant number of the public.
Opening more smaller stores reduces the distance between the store and customers and therefore increases capillarity. In this way, there are more centers that facilitate purchases for customers to make returns, collections, test new products, etc.
- New services to attract the public
Large multinationals use the Gruen method that uses the shop window, lighting, colors, etc. to influence visitors’ senses and provoke a more impulsive purchase. Brands know that any excuse is good to attract the public to their stores.
To do this, stores in urban centers offer the following services:
- Click & Collect
- 1h pick-up
- Same-day delivery
- Workshops and talks
- Experiences in store
Another of the great bets is to create an unforgettable shopping journey where experience is key to positioning yourself at the top of mind of customers as well as to strengthen their engagement and customer loyalty.
IKEA has opened small stores in the centers of large cities such as New York, London, Stockholm, Copenhagen, Paris, Barcelona, or Madrid. Under the name of Ikea Planning Studio, these stores offer free embroidery services for textiles bought in the store or personalization of furniture with vinyl produced in the stores.
Proximity stores give priority to the experience and services within the establishment even if it means sacrificing space to have more SKUs for sale. Thus, the product catalog is expanded thanks to omnichannel and the possibility of ordering online from the physical store.
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