Aisles Abroad is a regular feature that reviews notable grocery initiatives outside of the United States.
As Amazon aims to replicate its online retail success with a growing brick-and-mortar grocery footprint, a Portugal-based multinational is offering a glimpse into what operating an expanded grocery presence looks like in as a country’s leading retailer.
Sonae MC, which is part of the multinational Sonae group, uses multi-format Continent chain of shops. There are urban hypermarkets (Continente), large supermarkets (Continente Modelo) and small urban neighborhoods called “local markets” (Continente Bom Dia).
While nearly all of the stores under the Continente food retail banners are company-operated, Sonae MC also has hundreds of franchise grocery stores, made up of more than 300 Meu Super local supermarkets and 10 Modelo locations.
In total, sonae MC had 1,342 stores at the end of 2021, with grocery stores accounting for nearly half of the portfolio. Among that tally is Continente’s first stand-alone supermarket, which opened in Lisbon in May 2021 – just months after Amazon opened its first Amazon Fresh store with cashless shopping in the UK.
In addition to its variety of store formats, Continente has also pushed digital innovation, including a tool that automatically fills digital shopping carts for online shoppers and in-store technologies like scan-and-go shopping. They are all linked to the “fail fast” culture of testing hypotheses quickly and focusing on those that seem promising, said Bruno Mourão, Head of IT Transformation and IT Strategy and Experimentation for Sonae MC’s Information Systems Branch.
“I think the strategy of having multiple formats can be a really effective way to reach consumers, whether it’s where they live or by occasion,” Ken said. FenyoPresident of Research and Consulting at coresight Research, a global retail and technology company.
A range of formats
Continent has been busy expanding its fleet of small urban stores. In 2021, sonae MC opened 13 new food distribution stores, mainly convenience formats and stores located in the two largest cities in Portugal: Lisbon and Porto.
Mourão said Continente is leveraging its Bom Dia format to get closer to where shoppers live — a strategy many grocers in the United States have turned to in recent years to get closer to their customer base.
While most sonae MC’s grocery formats have seen flat or slight fluctuations in store counts since the start of the pandemic, its Last name Day banner – which translates to the beloved Portuguese greeting “hello” – has grown steadily over the past few quarters. At the end of June, the Bom Dia format had 146 stores, compared to 122 at the end of March 2020.
The Bom Dia stores are about 10,000 square feet each and include categories such as bakery, deli, liquor, take-out food and fresh meat and seafood, according to Cada Design, the Sonae MC company responsible for to create the concept of the banner.
The smaller formats make it easier to support the kind of shopping where people are rushing every day to grab a handful of items, Fenyo said. In general, Europeans tend to take more trips with smaller baskets than American shoppers, he said: “They are much more likely to buy what [they] want for this day or a few days.
Small-footprint stores in urban areas, in particular, can not only attract customers for trips with smaller baskets, but can also support a grocer’s e-commerce program by promoting fast neighborhood delivery, Fenyo said.
While some retailers in the United States, like Target and Walmart, are experimenting with small-format stores, they can look to traditional grocers overseas, who are exploring different store formats on the small end, for inspiration. said Anne Mezzenga, a Target veteran and co-CEO of retail blog Omni Talk.
“I still feel like [U.S. retailers are] trying to smash a Walmart on 4,000 square feet,” Mezzenga said. “It doesn’t feel like they’re rethinking, ‘What [does] what does a small format or an urban format of a Walmart store really look like? »
At the other end of the size spectrum, Continente caters to one-stop shopping needs with its namesake hypermarket format. Several shopping centers in Lisbon are home to Continente stores, including Centro Comercial Vasco da Gama, Colombo Shopping Center and Centro Comercial Telheiras. While grocery stores taking up space in malls are nothing new, American shoppers would likely be surprised to find Continente stores located inside malls, rather than featured on the perimeter.
Mezzenga said the placement makes sense, especially since e-commerce is fracturing the identity of malls as destinations for the “search and destroy mission.”
In addition to food banners, Sonae MC also owns several adjacent formats, including a chain of drugstores, pet care services, cafes and its new self-service restaurant banner, Cozinha Mainland.
Eye for innovation
sonaelike Amazon, has focused on digital innovation as part of its physical grocery footprint. Continent has a new self-checkout pilot, according to a recent revenue report, and welcomed new gamification features such as spin challenges and digital advent calendars to its loyalty program in 2021.
Its one-year-old stand-alone supermarket, in particular, stands out.
Called The Continente Labs, the approximately 1,610 square foot store features a scanless and cashless experience powered by Portuguese startup Sensei. Like Amazon’s stores with Just Walk Out, Continente Labs’ location allows people to scan a code with their phone to enter and exit and uses a host of technologies – ceiling cameras, shelf sensors and machine vision – to track the products selected by buyers. In total, the store has about 600 cameras and sensors. It also uses electronic gondola tags.
Fenyo said grocers are testing small, automated stores to understand how the technology works, how much it costs and what changes it brings to their operations. Stand-alone stores are seeing “a lot of interest” in Europe, especially given higher labor costs and more restrictions around hours than in the United States, he said.
Continente’s innovation also includes the Continente Food Lab, of the same name, which was launched in 2019 to help develop private labels and bring unique products from commercial and niche suppliers. As part of this program, Continente distributed products such as Petit Boogeyman’s soups and frozen organic baby meals; True Gum’s plastic-free chewing gum and insect-based “Tasty Mealworms” snacks and “Mealworm Bites” protein bars from startup Portugal Bugs. In some hypermarkets, Continente has dedicated areas to help customers find products bearing the Continente Food Lab seal.
In Portugal’s promotionally intensive shopping culture, Continente distributes personalized flyers and coupons to its customers, said Mourao. Continente also offers a subscription service that pre-fills items into customers’ online shopping carts for weekly orders..
Continente uses technology in a variety of ways to meet customer needs in stores. Mourão noted that there are self-checkouts, service counters, and click-and-collect services among the options available.
Continente can leverage its different retail formats by experimenting with new technologies and offerings for consumers, Fenyo and Mezzenga agreed.
“You are able to [fail fast] when you have multiple canvases to work on. …I think it’s imperative that you have this culture of learning and experimentation in order to deliver the best experiences for your customers,” she said.