Euromonitor International is pleased to present an interview with Stefan Van Rompaey of RetailDetail.be about the latest grocery retailing trends in Belgium. Stefan Van Rompaey studied communication sciences at KU Leuven University and has more than 20 years of experience as a chief editor at Belgian retail trade magazines StoreCheck and Retail Update. He joined RetailDetail in December 2015 as chief editor food.
What are the main trends in grocery retailing in Belgium in 2016?
Competition is fierce, with a continued pressure on prices and promotions. Colruyt remains the dominant player, still gaining market share, while Delhaize is getting back on its feet and Carrefour is hanging on. Most smaller groups are suffering. Recent illustrations are an important restructuration plan at Makro and several management changes at Intermarché and Louis Delhaize Group (Cora/Match). Nevertheless, we see a slight decrease in promotional pressure in 2016, as if the market is taking a short break now. Maybe everyone is holding their breath in anticipation of the Ahold-Delhaize merger.
Quite surprisingly, the hard discounters had a difficult year 2015 in Belgium. This was probably due to a lack of expansion and a sharp price competition between mainstream supermarkets, as Colruyt and Delhaize reacted strongly against the aggressive growth of Albert Heijn. But Aldi and Lidl are fighting back. Only very recently we have seen the introduction of branded fast moving consumer goods (fmcg) products at Aldi Belgium: Nutella and Kinder (Ferrero), M&M’s (Mars), Lenor (P&G), Coca-Cola. Both discounters are in the process of remodelling existing stores and enlarging the assortment – mainly in fresh and chilled products. Lidl has announced an important investment plan in order to accelerate its expansion.
Supermarkets are looking for a way out of price competition. On one hand, they are rapidly developing their convenience and proximity formats – the key growth area in Belgian food retail today – and upgrading their supermarket concepts. On the other hand, we see retailers developing new store formats with a premium positioning. Innovation is partly driven by the arrival of new players: at the low end of the market, non-food discounters like Action who are adopting more fmcg-products at bottom prices; at the high end, the rise of food halls, farmer’s markets and organic store concepts. I also believe we will see a continued trend towards the “blurring” of food retail and food service.
What are the most innovative new store concepts launched over the past year?
Carrefour has opened two “new generation” hypermarkets, in Mons and Koksijde. Both stores demonstrate a high service level, a focus on fresh and chilled foods, new foodservice concepts and innovative technology, such as ‘digital mirrors’ in the fitting rooms and a ‘digital wall’ near the entrance, where shoppers can order heavy items (for example crates of beer or soft drinks) to be collected at the check-out.
Colruyt is developing its fresh market concept CRU, a premium store environment emphasizing quality, taste and authenticity. It’s amazing!
How is the merger between Delhaize and Ahold going to impact the retailing landscape? How do you expect the other big retailers (Colruyt and Carrefour) to react?
That is indeed the main question for the near future. On the short term, the impact will probably be limited as the new combination will need some time to reorganize. In any case, the pressure on both branded goods and private label manufacturers will increase. Ahold Delhaize have announced important synergy effects as a result of their combined buying power. It’s clear that they expect even better buying conditions from their suppliers.
It remains to be seen though if Ahold Delhaize are going to invest this money in lower prices for the consumer. They may have other priorities, like investing in the development of their e-commerce activities. And everybody wonders if the new group will keep the Albert Heijn banner in Belgium. For reasons of efficiency and simplicity, a one banner strategy (Delhaize) would seem logical, but there are tactical reasons to bet on two banners, at least temporarily. Whatever the outcome, I don’t expect Colruyt and Carrefour to immediately change course, but they will be vigilant, evidently.
How is the internet retailing developing in grocery retailing? What synergies/conflicts have you seen between internet retailing and store-based grocery retailing?
Online remains a very small niche in fmcg. The risk averse Belgian consumer is adopting new shopping habits quite slowly and food retailers are taking small steps, being careful not to over-invest. Click and collect with order picking in-store is the dominant e-commerce model for internet retailing in fmcg for the moment, even if both Colruyt and Delhaize are testing “dark store”concepts. An interesting problem has arisen recently regarding online pricing. Colruyt uses a local pricing model in order to guarantee the lowest price for every store in its market area. Online, this model doesn’t work, of course. This means online shoppers at Colruyt cannot be guaranteed hey pay the lowest price. As e-commerce keeps growing in food, this might one day become a real threat to Colruyt’s positioning.