Return to site

The End of Hypermarkets And The Rise of Speciality Markets

broken image
Several weeks ago, the supermarket giant Tesco had announced that it was selling off portions of their business and looking for a buyer, in addition to closing some of their business abroad. This didn't come as a surprise to many retailers, however, it was the penultimate signal of the downfall of a British institution to many around the world, along with other global supermarkets that are facing a similar fate. 
The Hypermarket was a concept derived from the roots of the Walmart Era into the contemporary generation, in which a consumer could shop at a supermarket that also sold many other goods, such as clothes, toys and electronics. Walmart's founder, Sam Walton, was born in the Depression Era, and grew up during a time when many shops often were out of stock of popular items, and customers had to wait for days to weeks before new inventory was available. He founded Walmart on the philosophy that they would always be in stock of every item they sold in their store, neatly arranged into large isles; what the modern supermarket is today. 
broken image
Tesco was, for many generations, that iconic supermarket in the UK, having numerous gigantic shops, in addition to many multi mini-marts, often in the same neighbourhood. However, with the controversy of their Oxfordshire hypermarket before it even opened, and with another 43 Tesco supermarkets set to close, a definite change was occurring along the ranks of the supermarkets, and the Goliath of supermarkets was being taken down by smaller specialty markets, and with the internet generation rapidly multiplying, to the growing public consciousness about organic food, and the rise of direct-to-client local farms that delivered their organic goodness right to people's homes, global supermarkets around the world were facing an economic challenge, and so started the changing of the guard. 
However, this change didn't occur overnight, Whole Foods Market was founded in 1980 by John Mackey, the controversial entrepreneur who brought the concept of organic food to the wider US Market,  and Bread & Circus (which was later acquired by Whole Foods) was founded in 1975. 
Renée Elliott, the US-born, UK-based entrepreneur, was one of the pioneers who brought that concept into the UK. She founded Planet Organic in 1995, and at a time when the majority of people in the UK were shopping at Sainsbury's and Tescos, opened an organic food market right in the heart of London in Westbourne Grove. 
broken image
Renée Elliott, Founder of Planet Organic
I had a chance to talk to the iconic Founder a week ago, who also often speaks at The Guardian Masterclasses, has spoken at London School of Economics on women entrepreneurs and who recently spoke in Lisbon on social entrepeneurship in a conference organised by INSEAD last week.  
Renée told me that during those first few months when Planet Organic had opened that barely anyone came into the shop and she thought she was going under. It had been a testament to her faith and mindset, and convinced with certainty that this was what she wanted to do, it was a blow to faced with failure. However, in February 1996, the mad cow disease overtook the UK, and with the marketing of her organic beef at an opportune time, people started to flock into her shop, and in the first year, they generated a revenue of £1.2 million, then the second year, they doubled their revenue to £2.4 million.  
The trials and tribulations didn't end there. Although her start-up was taking off, she went through a 15-month legal battle as her business partner tried to push her out of the company. She also recalled that when they had initially been in the fundraising stage of her startup, she would have meetings with financial institutions and banks, and although she was the one who had all the numbers, figures, budgets and projections laid out, men would immediately defer to her male business partner to explain those figures. She gives me a wry, charming smile, as she told me about their surprised expressions, "I would tell them that I would be the one explaining the figures."
After winning her legal battle, she ran the company with her husband Brian for ten years and in 2009 the company appointed a CEO to run the management part of her company so that she could focus on raising her family. 
"I realised that I had to make a decision- either run my company, and have someone else raise my children, or I could appoint someone to run my company so that I could raise my children. It was a tough decision."
In the end, she chose to do the best of both worlds and embarked on an adventure to Italy for a few years before coming back to the UK. "Life is too short not to do what you love," Renée tells me. As founder, Renée is still an integral part of the Planet Organic brand, is involved in product development, their private label, training new employees, Founder inductions and public speaking. She also remains on the Board of Directors for Planet Organic.
broken image
Renée is also the author of two books, Me, You and the Kids Too; Healthy Eating for your Baby and Toddler.
What makes Planet Organic different from other supermarkets is that they work directly with local farmers to deliver organic boxes to customers, in addition to working closely with their suppliers. At a time when all other supermarkets are alienating their suppliers with extremely high costs of presentation of their products in their shops, Planet Organic works with the founders of small labels, to help them with product development early on. 
"We like work with founders of new brands very early on, and help them develop their products and brands so that they can sell to organic markets. We're creating an ecosystem of suppliers by developing close relationships with them."
broken image
Box full of veggies from the award-winning Riverford Organic Farms, founded in 1987 by Guy Watson in Devon, UK
I asked what Renée thought about the competition and the rise of specialty markets like Veganz in Germany and the award-winning Riverford Organic Farms, based in the UK, that has a direct-to-customer base, and delivers approximately 47K boxes per week utilising the franchise model, and even La Ruche Qui Dit Oui, a French-based direct-to-customer organic food market that just raised$9 million in Series B funding lead by UK's Felix Capital and the US-based Union Square Ventures two weeks ago
"The more, the merrier. My intention with Planet Organic was to spread a philosophy of healthy eating, to raise awareness about organic food and good nutrition. I think these other companies with a similar philosophy are part of that vision. As a retailer, we have to be innovative. Many companies can start to copy certain things that we do- for instance, when we got a juice bar, many other supermarkets started to integrate a juice bar as well. We have to constantly be innovative in order to compete in the market, but I embrace the competition. Competition makes you sharpen your game, but my vision always had a broader and deeper intention than simply being a retailer of organic goods." 
Renée tells me that originally there was a lot of resistance to that vision. Although her long-time shareholders have been with her for a long time since they joined the company, they didn't initially believe in the concept and had wanted to change it because "they didn't get it". Her shareholders finally came around, but she gives me a bit of advice that it is time-wasting to argue with shareholders, as well as being emotionally draining. "Just do what you do and surround yourself with people who believe in you, who understand and is excited about your company and vision from the onset."