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Hagkaup: A case of halve the footprint, yet triple the sales

Despite reducing its flagship store’s footprint by 50%, Icelandic supermarket Hagkaup managed to increase sales per square metre by 77% with a new layout design by M Worldwide, which won them a DBA Design Effectiveness Award.

mworldwide_hagkaup-dea2018_image5Although 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 supermarkets more often but buying fewer items in each trip.

Hagkaup partnered with M Worldwide to revisit its flagship store proposition, customer experience and environment to meet customers’ new shopping needs and fight off increasing competition. Not only this, but the flagship store’s footprint was reducing by almost 50% as a result of the supermarket’s business strategy to lower fixed costs, but use remaining square metres ‘smarter’ to maximise the profit of each and every one.

Business objectives: 

Despite the reduction in the store’s footprint, the new proposition needed to help Hagkaup Smaralind maintain the following versus the previous year – especially since there would be no other marketing support:

  • Levels of customers
  • Sales per square metre
  • EBIDTA per square metre (Earnings before interest, tax, depreciation and amortisation)
  • Overall EBIDTA 

mworldwide_hagkaup-dea2018_image1Taking 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. Through the environment, customers tangibly experience the product variety and exceptional service and special moments of activity in ‘hotspots’ throughout the customer journey ensure plenty of theatre to surprise and delight. At its core, traditional supermarket principles are swapped with the best of department store showrooming to encourage greater dwell time and smaller, more frequent visits. 

Hagkaup Smaralind is now almost 50% smaller in footprint but has more customers, more sales per square metre, and more EBIDTA than when the store was double the size. And this all happened against objectives to simply maintain year-on-year levels. 

Headline results: 

13% more customers; from 375,000 to 425,000

+77% increase in sales per square metre: from 133,000 krona/sqm to 236,000 krona/sqm

+180% increase in EBIDTA per square metre

+53% rise in overall EBIDTA 

You can read M Worldwide and Hagkaup’s DBA Design Effectiveness Award winning case study here. 

DBA Design Effectiveness Awards

Design Effectiveness AwardsA DBA Design Effectiveness Award win represents independent and authoritative recognition of the value of your work and will enable you to powerfully demonstrate your ability to deliver competitive advantage through design. 

The 2019 Entry Pack is available at: effectivedesign.org.uk  The entry deadline is: 5pm GMT, Friday 30 November 2018

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