How CapEx and Global Sourcing Can Redefine Non-Food Retail
While diversifying non-food categories presents a clear path to differentiation and profitability for grocery retailers, executing this transformation at scale requires more than good ideas - it calls for smart capital investments (CAPEX) and strategically aligned sourcing.
As the retail landscape continues to evolve rapidly across Europe, physical stores must become more agile, adaptable, and cost-effective. In his latest article, our Executive Director of Trading and Category Management, Krešimir Matišić, explores how modular CAPEX deployment and global procurement from more cost-efficient markets can unlock new value in non-food categories, even in uncertain economic conditions.
1. From static to smart: why modular store design makes strategic sense
Traditional store layouts limit adaptability. Fixed shelving, outdated displays, and rigid use of space make it difficult to respond to shifts in consumer behavior or seasonal trends.
Retailers need to pivot toward modular formats - movable shelving, flexible category zones, and intelligent product placement systems. This level of flexibility enables faster in-store adjustments, experimentation with new assortments, and dynamic merchandising, all while optimizing investment over time, explains Matišić.
Example: Carrefour is piloting flexible spatial designs in its non-food departments, including seasonal modular zones and in-store service areas. In the U.S., Target has implemented adaptable, zoned spaces that cater to frequently changing lifestyles and home goods assortments, maximizing both product relevance and discoverability.
2. CAPEX as a growth lever - not just a cost
Instead of viewing capital expenditure as a necessary burden, forward-looking retailers are leveraging it as a strategic asset. Investing in flexible infrastructure today enables:
- Seasonal category shifts
- Easier deployment of trend-driven campaigns
- Faster integration of digital tools (e.g., smart pricing, self-checkout, in-store analytics)
Example: Lidl has invested in flexible shelving systems and promotional islands across its European stores, enabling the rapid rotation of weekly non-food offers. In the U.S., Walmart has implemented next-generation stores with digital signage and modular fixtures that seamlessly connect physical and digital touchpoints.
Retailers that treat CAPEX as a driver of agility are gaining a competitive edge, both in operational execution and in the long-term customer experience.
3. Smarter sourcing from lower-cost markets - without the risk
Sourcing from countries like China, Vietnam, and Turkey remains essential for margin optimization, but the reality is that excess inventory typically cannot be returned.
So how can global sourcing be made effective in today’s environment?
- Smaller test volumes with rapid replenishment options
- Third-party quality inspections before goods are shipped
- Flexible supplier contracts with shared risk models
- Integration of real-time sales data to inform reorders
Example: European retailers such as Action and Pepco apply a “test and scale” approach for goods sourced from Asia, relying on demand forecasting and fast turnover. In the U.S., Costco’s direct sourcing model and limited SKU strategy provide strong margin protection, even when importing high volumes.
By reducing per-unit risk and enhancing quality control, retailers can confidently import and scale successful non-food categories.
4. CAPEX + procurement = an integrated strategy for non-food success
CAPEX and procurement decisions must be aligned. Great product ideas are not enough if stores are not equipped to execute them. Likewise, investing in physical flexibility means little without reliable and scalable sourcing.
The future of non-food retail lies in bridging the gap between physical execution and procurement strategy, ensuring that store shelves are ready for what’s being sourced, and that sourcing reflects real consumer demand.
As Krešimir points out, non-food is a powerful growth driver, but only when supported by the right infrastructure and disciplined procurement practices. Retailers that align CAPEX with a global sourcing strategy will be the ones who not only withstand the changes in European retail but also actively shape them.
