Dutch variety-store retailer HEMA opened the doors to its first UK store on Thursday 12th June. The UK mixed-goods retail sector is already crowded, but many of the major chains are positioned on price. Arriving in a crowded sector HEMA arrives from the Netherlands with a mix of beauty, homewares, stationery, leisure goods and food. In its home market, HEMA is renowned for its cakes and smoked sausages but the company told us it would not be selling these in the UK. HEMA is positioned on affordability, but without the ultra-low-price pitch seen at stores such as Poundland or B&M Bargains. It will be entering a sector that has become increasingly crowded with these discount retailers. If we include Wilkinson in that category, the biggest value retailers took one-quarter of the mixed-goods sector in 2013. The mixed-goods sector includes any non-specialised non-food retailers and so it also includes some department stores. FIGURE 1: MAJOR GENERAL MERCHANDISERS’ SHARES OF MIXED-GOODS SECTOR SALES, 2013 SOURCE: COMPANIES/ONS/MINTEL The expansion of the discount retailers is bolstering growth in the mixed-goods sector, where sales grew 4.4% in 2013. Whether shoppers will continue to flock to discount retailers when they feel a little better off is an issue for another day. But they are arguably now more accustomed to including general merchandise stores in their shopping repertoire. First store shows a distinct proposition HEMA’s more mid-market positioning means it will not be competing directly with the value mixed-goods retailers. With its diverse product mix it will be aiming to take share from grocery retailers and specialists such as beauty stores as well as other general merchandisers such as Argos and Wilkinson. FIGURE 2: BEAUTY DEPARTMENT, HEMA, VICTORIA STATION, JUNE 2014 FIGURE 3: FOOD SECTION, HEMA, VICTORIA STATION, JUNE 2014 SOURCE: HEMA HEMA’s first UK store is a small 2,700 sq ft outlet in Victoria Station (London). Our main reservation is whether its eclectic and rotating product mix – ranging from barbecues and picnic-ware to stationery and fashion accessories – will suit a transit location. Further stores are planned for shopping centres in Kingston and Bromley in London. And we think more conventional shopping-mall or high-street locations could offer a better fit for HEMA: these locations will allow the retailer to establish a body of regular shoppers who can become familiar with the brand and its product offer. What we think Summer-themed ranging in its first store suggests seasonal changes in its product offer will give shoppers reasons to browse frequently. But this is more likely to be achieved in conventional shopping-mall or high-street locations. HEMA will need to emphasise its distinction from existing mixed-goods retailers, to a public unfamiliar with the brand. In particular, it should cultivate a more aspirational pitch or quirky positioning, as Denmark’s Tiger Stores has done: HEMA should affirm its value-for-money offer in the wider sense. Positioned well, there’s no reason it cannot successfully establish a foothold in the UK market. You might also be interested in: No related posts.