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SUPPLY CHAIN

A ground-breaking approach
pioneered by Fumagalli

5 October 2015

The hypermarket model is in trouble in Italy

Greater flexibility in the distribution chain and shorter distances to the consumer have become the keys to business success.

The food sector is leading the economic recovery. According to Istat, the Italian national statistics agency, there were positive signs from the retail trade and industrial production in the first half of 2015. And along with shopping carts filling up again, there is more news: large retailers are hurting, Italian brands are proving enduring and there is a return to neighbourhood shops.

On the one hand, the foreign retail giants are paying for their colossal buildings, located on the outskirts of towns, where they have built a successful business for at least 15 years. On the other hand, the widespread presence of these structures in the South of Italy, which has been hit harder by the economic crisis, has seen a more marked departure of consumers from hypermarkets and a return to the local markets.

Italian brands have preferred to focus on shorter supply chains and on a stronger link with local suppliers, both factors that guarantee greater organizational flexibility, with the ability to quickly change varieties and prices to meet the needs of customers. Last but not least, with the decline of hyper-consumerism, dictated by the new economic conditions in Italy, buying habits have also changed: back in vogue are small shops, close to home, which can be reached without using the car. Neighbourhood supermarkets for small everyday purchases are also proving popular.

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