Retail Formats and Types of Retailers
Format = the whole offer
A format is the package of size, assortment, price, service and location. Learn the archetypes by their trade-offs, not by memorising sizes alone.
- Convenience store: roughly 500–2,000 sq ft, close to home, long hours, 2,000–4,000 SKUs, thin range but full basket fill, prices slightly higher.
- Supermarket: about 2,000–10,000 sq ft, self-service, food and grocery led, weekly family basket.
- Hypermarket: very large (often 40,000+ sq ft), destination shopping, food plus general merchandise, bulk packs, low price, parking essential.
- Department store: several floors, each floor a category, service and fashion led, high margin needed.
- Specialty store: narrow line, deep range - only footwear, only pharmacy.
- Category killer / big-box discounter: vast range in one category at everyday low price.
- Cash-and-carry: membership-based, bulk, serves resellers, not end consumers.
Vocabulary check
Breadth is the number of categories; depth is the number of SKUs inside a category. A specialty store is narrow-and-deep; a hypermarket is broad-and-shallow in each category.
Worked example
An operator has 6,000 sq ft, plans 12,000 SKUs, targets families within 2 km for daily needs, and works to an 18% gross margin. Which format, and why? Reasoning: 6,000 sq ft sits above convenience-store scale but far below hypermarket; a food-led daily-needs basket needs self-service and easy access, not a destination draw; and 18% margin only funds a value supermarket. A department store would need 35–45% margin to pay for its service levels. Answer: supermarket.
Traps that cost marks
- Treating a mall as a retail format (it is a landlord).
- Separating supermarket and hypermarket only by size and ignoring the destination/price logic.
- Confusing cash-and-carry with a wholesale shop open to the public.
- Calling a franchise a format when it is an ownership model.