What Is a Hypermarket? Definition, Advantages, and Example

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.

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 most well-known hypermarkets include the Walmart Supercenter, Fred Meyer, Meijer, and Super Kmart.

Fred Meyer, based in Portland, Oregon, is often credited with founding the first U.S. hypermarket in 1931 when it opened its store in Portland's Hollywood District. The store combined the existing supermarket model with a pharmacy and clothing retailer.

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

Understanding Hypermarkets

Big box retailers have the advantage of selling high volumes of merchandise, which in most cases affords them greater buying power compared with retailers who sell goods in smaller quantities.

This lets companies such as Walmart, Cosco, and Tesco apply pricing pressure on vendors, potentially securing discounts on goods that their rivals cannot get from the vendors. This practice allows hypermarket companies to sell merchandise at lower rates than their competitors.

The combination of a full supermarket with the wide variety of merchandise offerings found in department stores and other types of retailers can pose a highly competitive existential threat to local supermarkets and other retailers alike.

Local Market Pressure

A company such as Walmart 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 negotiate for collective benefits such as regular salary increases and health insurance. Historically, Walmart has kept 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 Walmart 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 hypermarkets, 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.