I used to warn potential investors to avoid retailers that were at risk from competition from either hypermarkets or the internet, especially in the UK where hypermarkets were growing rapidly and online shopping already represented 14% of non-food sales by 2011.

I used to warn potential investors to avoid retailers that were at risk from competition from either hypermarkets or the internet, especially in the UK where hypermarkets were growing rapidly and online shopping already represented 14% of non-food sales by 2011.

Like most things in retail, my maxim had a shelf life. As hypermarkets’ sales have faltered, there has been a significant slowdown in openings.

Online, however, has continued to grow strongly. That 14% non-food share – the most recent figure available – is up from 2% 10 years ago. In food, online represents less than 3% of total sales. So the internet is changing non-food much more than food.

While home delivery is expensive for all retailers, food retailers don’t fully pass on the cost. Click-and-collect may save those delivery costs, but it has so far proved to be of marginal interest for food customers. Online doesn’t increase food consumption as a whole – perhaps the reverse – so it’s just an extra cost.

Online non-food has proved more successful. Non-food sales have migrated away from ‘bricks’ retailing.

Some general retailers, such as Next, have successfully developed online. Others, such as Marks & Spencer, just didn’t get it at first.

But it has also put pressure on the hypermarkets. The original concept that people would travel further to buy their shopping at hypermarkets if they could also get non-food items looks less true these days, especially now that you can buy those same items easily online.

General merchandise in a hypermarket is going to have to become more impulse-driven. It used to be a footfall driver, but now is becoming a basket-builder, reliant on grocery footfall. General merchandise can no longer be justified as supporting food sales. It will have to stand on its own. Low non-food sales per square foot – typically half that of food – are likely to become a more important KPI.

Is putting click-and-collect into grocery stores the answer? Theoretically it should help, as it has proved pretty successful in non-food outlets (although mainly because third-party delivery services are so poor).

However, it still needs people to order non-food online from the grocers. And this is the supermarkets’ weakest area. People buy non-food from a food store because it’s convenient, not because they have any faith in a grocer to provide non-food.

If you bought a TV online, why would you point your cursor at Sainsbury’s, rather than Dixons or Amazon? And even if you did, when you get to their respective websites, they’re just not in the same league for non-food.

Could home delivery be the online equivalent of a hypermarket’s one-stop convenience? Would using the grocers’ slick and reliable food delivery services to deliver non-food purchases be an attractive strategy? Possibly, but the question remains, why buy non-food from a food store?

Until grocers can answer this, I’m simplifying my investment advice to: avoid online competitors.

  • Simon Laffin, independent retail adviser and non-executive director