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Supermarket becomes a “place to stay”

The supermarket has conquered an important place in Dutch shopping culture. Although people are increasingly shopping online, the number of supermarkets is still rising. Currently there are more than 6,000 in the country, with new ones being added all the time. Almost one every three days. Most of these are in the smaller ‘to go’ segment. On the other hand, bigger supermarkets become “places to stay”.

Supermarkets are one of the country’s best performing retail types, but this does not mean that they are having it easy. Margins are often small and competition fierce. To survive and increase market share, they need to be innovative and competitive - so they are. More stores are opting to provide a focused service: small ‘to go’ outlets for speed, medium-sized supermarkets with a comprehensive product range close to home for convenience, and XXL-stores for a complete shopping experience.

It is a trend that bigger supermarkets offer more experience to their customers to extend their stay. Traditional supermarket shelves and corridors take up less and less of the total floor space and make room for ‘food islands’ where fresh food is prepared on-the-spot. The result is similar to a traditional market where you can buy fresh products. In addition, many shopping centers are clustering the bakery, butcher, fish and cheese specialists in “fresh market” concepts, often located next to the supermarket. Next to the products, the competition focuses more and more on the customer experience. 

Many medium-sized, neighbourhood-centred supermarkets offer coffee corners with facilities to have a seat, read a magazine and meet your neighbours. We foresee that this will go much further. For instance, last year Jumbo Foodmarket opened a large café with a space for cooking workshops and a childrens’ playground as part of their large supermarket in the Mall of the Netherlands. Albert Heijn opened Bakery Café and Deli Kitchen in several stores in 2017. These concepts were rebranded to Allerhande Café (for sandwiches, coffee and juices) and Allerhande Keuken (for fresh meals) in 2019. Will wine bars and sushi corners follow suit? By adding Food & Beverage to their proposition, supermarkets are becoming “places to stay”.

Other submarkets

Furthermore, supermarkets are trying to conquer a share of other submarkets. After a pilot with food delivery from a Jumbo Foodmarkt in Groningen, Jumbo recently started delivery services in Utrecht and Amsterdam. Train travellers can also pre-order their freshly-prepared meals in Eindhoven, where they are ready for pick-up at the Jumbo City store on arrival at the central station. Albert Heijn is experimenting with an Amsterdam-based ‘dark kitchen’ where chefs prepare meals for home delivery, called Allerhande Kookt. This opened in the beginning of 2019. In addition, supermarkets also offer more and more meal boxes, competing with providers like HelloFresh and Marley Spoon.

Another ‘experiment’ involves the collaboration between Jumbo and HEMA. Jumbo will take over 17 lease contracts on HEMA buildings, especially on city locations.Furthermore, they will develop a co-concept for six train stations where HEMA supplies non-food and Jumbo takes care of food. Last but not least, all Jumbo supermarkets in The Netherlands and Belgium will gradually start selling non-food HEMA products. Both retailers believe the collaborations will lead to synergy and bigger turnovers.

All these initiatives allow supermarkets to benefit from their physical presence. They have a low rate of attrition and a great resilience against the impact of online shopping. This stability is one of the reasons why real estate investors are showing increasing interest. Despite continually declining yields, scarcity and a lack of investment alternatives lead to a bigger demand. The often long lease contracts are a positive factor: they ensure a stable cashflow over a longer period. Moreover, supermarket real estate is one of the few retail types that Dutch banks are still willing to finance. It is the most stable element in the Dutch retail landscape for investors. Not only now, but also in the future.