Remodelling an underperforming store into a discount format does not really address the underlying concerns regarding the profitability of a particular hypermarket.

Auchan’s new discount hypermarket Prixbas opened its doors at Mulhouse in eastern France on March 24.

The rebranding of the outlet from a regular Auchan hypermarket is the latest attempt from a French retailer to tackle what is becoming a national obsession - the ailing hypermarket.

Eric Galant, operational director of eastern France for Auchan, called the store an “experimental commercial format”, designed to “enhance the commercial dynamics of the store”. Auchan intends to convert its most underperforming hypermarkets into discount stores on an ad hoc basis in all of its markets.

Sales at the Mulhouse store had declined sharply over the past few years and it has been converted to the discount format to meet the needs of shoppers in the region, which borders Germany - the home of the discount giants.

In Mulhouse, which has high levels of unemployment, Auchan has faced increasing competition from discount chains and cross-border shopping in Germany. The store has lost about 285,000 customer visits between 2004 and 2008, and turnover has fallen 16%.

Operating an Everyday Low Prices (EDLP) strategy, Prixbas par Auchan offers 20,000 products in both food and non-food. The range includes an enhanced economy offering, Auchan standard brands and a range of 380 organic products, which have been given a dedicated area.

In line with the EDLP strategy of the store, there are few promotions except for single promotions on a specific branded product in bulk at an “exceptional” price, and seasonal goods, which have a dedicated area near the entrance.

The store concept, which will be trialled for two to three years, has tapped into the retailer’s experience with “Les Halles d’Auchan” discount superstores and the overall roll-out of self-discount areas in regular Auchan hypermarkets that predominantly sell loose goods.

The store resembles the rather unappealing attempt by Casino, with its Géant Discount format, to inject a little bit of discount into an underperforming hypermarket.

Remodelling an underperforming store into a discount format does not really address the underlying concerns regarding the profitability of a particular hypermarket. The jury is out on the success of the Géant Discount stores, which in truth have become a bit of an eyesore on Casino’s estate. Similarly, it is uncertain whether Auchan’s pink and green discount hypermarket will be the answer to a national obsession.

Greg Hodge is research director of Planet Retail.

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