By James Taylor
As supermarket margins remain under pressure, retailers are looking at their stores differently. The traditional focus on selling more food from every aisle is increasingly being joined by another question: how much profit can each square metre of the store actually generate?
In this ISN interview, James Taylor, ISN retail analyst, speaks with Riad Beladi, Founder and Editor of International Supermarket News, about the growing role of non-food impulse products, curated displays and what happens when supermarket space is treated as valuable retail real estate rather than simply shelf space.
James Taylor, ISN Analyst: Riad, supermarkets have always sold some non-food products, so why are you seeing renewed interest in these categories now?
Riad Beladi: The pressure on food margins is making retailers look again at everything inside the store. For years, the supermarket was mainly about getting customers through the food aisles and increasing basket size. But when price competition becomes intense, selling more volume does not automatically mean making more money.
This is where smaller non-food categories become interesting. A well-positioned stationery range, magazine, gift item, paper product or seasonal product can occupy relatively little space and still generate a useful margin.
The important point is that retailers should not simply add more products. They should ask whether the space is earning its place.
James Taylor: You have used the expression “dwell anchors”. What exactly do you mean by that?
Riad Beladi: I am talking about displays that make customers slow down rather than simply walk past them.
Think about the journey through a supermarket. There are areas where customers move quickly and areas where they naturally pause. Retailers can use those transition points for products that encourage browsing.
A small, well-designed display can sometimes achieve more commercially than another long run of conventional shelving.
James Taylor: Does this mean the traditional supermarket layout is changing?
Riad Beladi: I think it is already changing. The supermarket is becoming less rigid.
Retailers are looking at entrances, checkout approaches, café areas and other high-traffic spaces as opportunities rather than dead zones. The objective is not necessarily to make customers spend more time in the store for the sake of it. It is about making the time they already spend there more commercially productive.
James Taylor: What should category managers measure when deciding whether a non-food display deserves more space?
Riad Beladi: They should look beyond units sold. Margin per square metre is becoming much more interesting.
A product can sell very quickly but still contribute relatively little after logistics, handling and shrinkage. Another product may sell fewer units but produce a much stronger return from a very small footprint.
That is why I believe supermarket buyers will increasingly think about the store almost like a property portfolio: every square metre has to justify itself.
James Taylor: And what about smaller independent brands trying to get into supermarkets?
Riad Beladi: Having a good product is only the beginning. Retailers need reliable supply, correct packaging, barcodes, data and replenishment. A beautiful product that cannot be delivered consistently will not survive a supermarket review.
The opportunity for smaller brands is significant, but they have to understand that supermarkets are highly organised businesses.
James Taylor: Finally, where do you see this going?
Riad Beladi: I think we will see much more experimentation with the supermarket floor.
The future may not be about making every aisle look the same. Retailers will increasingly create different commercial zones, each with a specific purpose.
The interesting development is that supermarket space itself is becoming a category — and category managers are beginning to manage it that way.
