Despite reducing its flagship store’s footprint by 50%, Icelandic supermarket, Hagkaup, managed to increase EBIDTA by 53%, with a new layout design.
Although Hagkaup was the fourth most popular food retailer in Iceland, it faced a threat from increasing popularity of discount stores and Costco joining the Icelandic market in 2017. Shopper behaviour was also changing with people visiting the supermarket more often but buying fewer items in each trip.
In light of this, Hagkaup wanted to give customers the feeling that they were getting more for their money but without increasing operational costs . Taking inspiration from department stores to bring more theatre to the supermarket, with distinct zones, places to dwell and seasonal displays, the redesign has been so successful that the concept will be applied across other stores.
The target was merely to maintain year-on-year levels as they condensed down the store by 50%, but they actually managed to attract 13% more customers and increase sales per square metre by 77%.