Second in rank is Delhaize and the position of this chain is comparable to Albert Heijn in Holland," he continues. "Delhaize was in competition with Colruyt for years and now there's another annoying competitor. It's difficult for them. They are working on the price image and promotion at the moment and this has a lot to do with AH. But it's not just Albert Heijn that is influencing Delhaize and the other Belgian retailers' behaviour: the growing Aldi and Lidl are also influencing this a lot." The third player is Carrefour. "They were the market leader, but are working on a 'resurrection' at the moment. Carrefour wants to get its business in order and not look at Albert as much. They want to leave that fight to Delhaize and Colruyt."
Disrupting the market
"Yet the retailers still see AH as a 'market disrupter'. This is in part due to a difference in laws. But there's a difference in every sector: a Dutchman prefers to get petrol across the border and you can't do anything about that. Albert Heijn's advantage is that their costs are lower, so there is some unfair competition. AH pays the same labour costs as their competitors in Belgium, but a lot of business is done from Holland, including logistics from the distribution centre and this saves money. This keeps the prices sharp. But I don't think they'll be able to hold on to that price advantage forever. The prices will come together over the course of the years. But not yet and this is causing tension."
Disrupting the market
"Yet the retailers still see AH as a 'market disrupter'. This is in part due to a difference in laws. But there's a difference in every sector: a Dutchman prefers to get petrol across the border and you can't do anything about that. Albert Heijn's advantage is that their costs are lower, so there is some unfair competition. AH pays the same labour costs as their competitors in Belgium, but a lot of business is done from Holland, including logistics from the distribution centre and this saves money. This keeps the prices sharp. But I don't think they'll be able to hold on to that price advantage forever. The prices will come together over the course of the years. But not yet and this is causing tension."
Another disruption on the market are the political after effects. "It is very clear in fruit and vegetables. It is a very sensitive point for a grower if a foreign player in your country isn't selling your products. There has been a lot of friction over this and even the Minister President spoke about it. AH now has partially Belgian products in the assortment, but continue to do what they were doing before. Albert Heijn sources as much as they can from the Netherlands to save costs. For fruit and vegetables too."
"Thirdly, Albert Heijn's commercial policies are very different. They have other agreements with suppliers than Belgian retailers. AH buys goods in Holland against Dutch standards. In Belgium an offer on a brand product is almost always paid for by the manufacturer. This is not the case as much in the Netherlands. There the store itself decides on the consumer price. It can even be sold at a loss. The result is that Dutch offer folders are a lot thinner but have stronger offers. The Belgian ones are thicker but the offers aren't as extreme. The Belgian offer policy has become more Dutch over the years and now they are pressuring the brand manufacturers to supply against the same conditions. They want to pay less like, AH."
"Thirdly, Albert Heijn's commercial policies are very different. They have other agreements with suppliers than Belgian retailers. AH buys goods in Holland against Dutch standards. In Belgium an offer on a brand product is almost always paid for by the manufacturer. This is not the case as much in the Netherlands. There the store itself decides on the consumer price. It can even be sold at a loss. The result is that Dutch offer folders are a lot thinner but have stronger offers. The Belgian ones are thicker but the offers aren't as extreme. The Belgian offer policy has become more Dutch over the years and now they are pressuring the brand manufacturers to supply against the same conditions. They want to pay less like, AH."
Future
Gino can't see AH taking over retailers yet. At least, not on the short term. "Taking over franchise business has its advantages, but remoulding them is hard work." He says it is difficult to say what the Belgian food retail landscape will look like in a few years. "Aldi and Lidl are doing fantastic at the moment. No one could have predicted that two years ago. Back then everyone was looking at AH and no one was considering the discounters. It's difficult to predict the future."
"What I can say is that there is a high level of maturity: there is already too much food retail. This would mean that the weakest links drop out. What is striking is the increasing number of local supermarkets. The smaller ones are doing well, but the large shops and hypermarkets are struggling. This is the case in multiple European countries." According to Van Ossel it is almost improbable that Colruyt, Delhaize, Carrefour, Aldi and Lidl will drop out. None of the five will suddenly be in great difficulty. Certainly not in just a few short years. AH is now disrupting the market, but we can't exaggerate. If the price advantage has been hollowed out over some time, it will be a different story. You will see that competitors will find solutions. An example is custard, for which the Flemish specifically visited Albert Heijn. It's a success, but AH is no longer the sole supplier. Other Belgian retailers now also have it in stock."
25 locations
Two more locations will be added in Nijlen and Westmalle, writes retaildetail.be.
25 locations
Two more locations will be added in Nijlen and Westmalle, writes retaildetail.be.