As Amazon aims to replicate its e-tailing success with an expanding brick-and-mortar grocery footprint, a multinational company based in Portugal offers a look into what operating an extensive grocery presence as a country’s leading retailer looks like. 

MC, a part of the multinational business group Sonae, operates the multi-format Continente retail chain. There are urban hypermarkets (Continente), large supermarkets (Continente Modelo) and smaller urban neighborhood locations known as “proximity markets” (Continente Bom Dia). 

While nearly all of the stores under the Continente food retail banners are company-run, MC also has hundreds of franchised grocery stores.

In total, MC had 1,342 stores at the end of 2021, with grocery locations comprising nearly half of the portfolio. Among that tally is Continente’s first autonomous supermarket, which opened in Lisbon in May 2021 — just months after Amazon opened its first Amazon Fresh store with checkout-free shopping in the U.K.

Along with its variety of store formats, Continente has also been pushing digital innovation, including a tool that automatically fills digital carts for online shoppers and in-store technologies like scan-and-go shopping. They all tie back to the “fail fast” culture of quickly testing hypotheses and focusing on the ones that appear promising, said Bruno Mourão, head of IT transformation and IT strategy & experimentation of MC’s information systems arm.

“I think that strategy of having multiple formats can be a really effective way of reaching consumers, whether that’s where they live or by occasion,” said Ken Fenyo, president of research and advisory at Coresight Research, a global firm specializing in retail and technology.

A range of formats

Continente has been busy expanding its fleet of smaller, urban stores. In 2021, MC opened 13 new food retail stores, primarily proximity formats and stores located in Portugal’s two largest cities: 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 U.S. have turned to in recent years to become closer to their customer bases. 

While most of MC’s grocery formats have seen flat or slight fluctuations in store count since the pandemic started, its Bom Dia banner — which translates to the beloved Portuguese greeting “good morning” — has steadily grown in recent quarters. By the end of June, the Bom Dia format had 146 stores, up from 122 at the end of March 2020. 

Bom Dia stores are roughly 10,000 square feet each and include categories such as bakery, deli, alcohol, food-to-go, and fresh meat and seafood, according to Cada Design, the firm MC commissioned to create the banner’s concept. 

Smaller formats make it easier to support the kind of shopping where people are running in every day to grab a handful of items, Fenyo said. Generally, Europeans tend to make more trips with smaller baskets in comparison to U.S. shoppers, he said: “They're much more likely to be buying what [they] want for that day or a couple of days.”

Stores with reduced footprints in urban areas, in particular, can not only attract customers for smaller-basket trips, but also can support a grocer’s e-commerce program by powering rapid delivery in neighborhoods, Fenyo said. 

While some retailers in the U.S., like Target and Walmart, are testing small format stores, they can look to legacy grocers abroad, who are exploring different store formats on the smaller end, to gain inspiration, said Anne Mezzenga, a Target veteran and co-CEO of retail blog Omni Talk. 

“It still feels like [U.S. retailers are] trying to squish a Walmart into 4,000 square feet,” Mezzenga said. “It doesn’t feel like they’re rethinking, ‘What [does] a small format or urban format of a Walmart store really look like?’”

On the other end of the size spectrum, Continente taps into one-stop shopping needs with its hypermarket format of the same name. Several Lisbon malls house Continente stores, including Centro Comercial Vasco da Gama, Colombo Shopping Centre and Centro Comercial Telheiras. While grocery stores occupying space at shopping centers is not a new occurrence, U.S. shoppers would likely be surprised to discover the Continente stores located inside the malls, rather than featured on the perimeter.

Mezzenga said the placement makes sense, especially as e-commerce fractures malls’ identities as destinations for the “seek-and-destroy shopping mission.”

Along with the food banners, MC also has several adjacent formats including a pharmacy chain, pet care services, coffee shops and its newly launched self-service restaurant banner, Cozinha Continente. 

Eye for innovation

MC, like Amazon, has focused on digital innovation as part of its physical grocery footprint. Continente has a new self-checkout pilot, according to a recent earnings report, and welcomed new gamification features such as spin-the-wheel challenges and digital advent calendars to its loyalty program in 2021. 

Its one-year-old autonomous supermarket, in particular, stands out. 

Called The Continente Labs, the approximately 1,610-square-foot store offers a scanless and cashless experience powered by Portuguese startup Sensei. Like Amazon’s stores with Just Walk Out, The Continente Labs location allows people to scan a code with their phones to enter and exit and uses a host of technology — ceiling cameras, shelf sensors and machine vision — to track which products shoppers select. In all, the store has roughly 600 cameras and sensors. It also uses electronic shelf labels. 

Fenyo said grocers are testing small, automated stores to understand how the technology works, how much it costs and the changes it brings to their operations. Autonomous stores are seeing “a lot of interest” in Europe, especially, given higher labor costs and more restrictions around hours than in the U.S., he said. 

Continente’s innovation also includes the similarly named Continente Food Lab, which launched in 2019 to help develop private label brands and surface unique products from both commercial and niche suppliers. Through the program, Continente has distributed products such as Petit Papão’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 select hypermarkets, Continente has dedicated floor space to help customers find products bearing the Continente Food Lab seal. 

In Portugal’s promotional-intensive shopping culture, Continente distributes personalized leaflets and coupons to its customers, Mourão said. Continente also offers a subscription service that prepopulates items in customers’ online carts for weekly orders. 

Continente uses technology in different ways to meet customer needs in stores. Mourão noted there are self-checkouts, service counters and click and collect services among the options available.

Continente can leverage its different retail formats as it experiments with new technology and offerings for consumers, Fenyo and Mezzenga agreed.

"You’re able to [fail fast] when you have several canvasses to work with. ... I think it’s imperative you have that culture of learning and experimentation in order to provide the best experiences for your customers,” she said.