What is a 'Hypermarket'

A hypermarket is a retail store that combines a department store and a grocery supermarket. Often a very large establishment, hypermarkets offer a wide variety of products such as appliances, clothing and groceries.

BREAKING DOWN 'Hypermarket'

Hypermarkets offer shoppers a one-stop shopping experience. The idea behind this big box store is to provide consumers with all the goods they require, under one roof. Some of the more popular hypermarkets include the Wal-Mart Supercenter, Fred Meyer and Super Kmart.

Hypermarkets can include warehouse-like stores that might also offer merchandise found in discount stores or specialty stores at one location.

How Hypermarkets Fit in the Competitive Retail Landscape

The combination of a full supermarket with the merchandise of department stores and other types of retailers can pose a highly competitive threat to local supermarkets and other retailers alike. Big box retailers have an advantage of selling high volumes of merchandise, which can afford them greater buying power compared with retailers who sell goods in smaller quantities. This lets companies such as Wal-Mart apply pricing pressure on  vendors, potentially securing discounts on goods that their rivals cannot get from the vendors. This allows the hypermarket company to sell merchandise at lower rates than its competitors.

A company such as Wal-Mart poses a particular threat with its hypermarket locations because of its efforts to keep its employees from unionizing. In many American supermarkets, employees are members of labor unions that negotiation for collective benefits such as regular salary increases and health insurance. Historically, Wal-Mart has kept such unions from taking root in its stores, which has arguably allowed the company to control its costs in ways that traditional supermarkets cannot.

The presence of a hypermarket from a company such as Wal-Mart can mean discount prices with profit margins that local competitors might not be able to sustain. This can force rival supermarkets to attempt to renegotiate terms with their workers or make cost-cutting measures in order to remain viable. In extreme cases, the long-term effects of these practices can drive competition out of business.

Given the range of products available through hypermarket, such a retailer may also pose a competitive threat to shopping centers that traditionally served as focal points for different retailers to operate from. Such shopping centers might include a supermarket, department stores, and other specialty stores that sell comparable merchandise that a hypermarket may sell. The difference is that the operator and owner of a hypermarket would see combined sales from all of these channels.

Hypermarkets can be found across international markets such as Europe, Asia, the Middle East, North Africa, and the Americas.

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