Since they appeared in continental Europe in the early 1970s, hypermarkets have turned retailing’s competitive structure upside down, prompting an overhaul of marketing, sales techniques, and retail logistics, and revolutionizing consumer goods manufacturing. But signs have emerged that the format is weakening. A study of hypermarket evolution from 1991 to 1995 found that declines in the rate of consumption, government regulation, and demographic changes are starting to take their toll. More alarming for their operators, the study also found that hypermarkets appear to be losing their appeal for consumers, while other, newer retail formats are gaining momentum.

The first hypermarkets opened in France, and the format has since spread to other European countries, South America, and Asia. A hypermarket looks like a grocery store that has expanded to 10,000 square meters of sales space and 60,000 products. But the resemblance stops there. First, hypermarkets are located outside city centers. Second, they offer many products besides food: houseware, car accessories, and gardening supplies, for example. With their broad ranges, large sales floors, and aggressive pricing, they have won over consumers, helped to alter entrenched shopping habits, and created wealth for shareholders.

Hypermarkets’ success formula is in question

Hypermarkets appear to...