Supermarket giant Albert Heijn (AH), present on every street corner in the Netherlands, comes to Belgium.
The first opens in a town close to the Dutch border. This secures them of customers and a spot close to their distribution center. The product line will be a mix of Dutch and typical Belgian products.
You could see this as sort of a trial run. And if successful, rumors are AH is looking to open up to 200 stores.
Two questions:
Is there room in the current market to open up 200 new locations?
How do they plan to compete with existing retailers?
How do they plan to compete with existing retailers?
Market situation
It's hard to predict if there is room for them. Their Dutch stores are a combination of sharp prices and a nice shopping environment.
On the low cost part of the Belgian markets there are retailers such as Aldi, Lidl and Colruyt. Their focus on cost control makes their stores also less fancy. Chains like Delhaize and Carrefour are at the top end of the market, with a bit more pricey products but a nice interior.
So if they would copy their Dutch concept they would be in between these two groups.
In the hunt for good locations AH might be looking to convert existing franchise stores. Or of course something drastic like a acquisition of the Belgian Carrefour operations, which have been in trouble ever since they entered Belgium.
On the low cost part of the Belgian markets there are retailers such as Aldi, Lidl and Colruyt. Their focus on cost control makes their stores also less fancy. Chains like Delhaize and Carrefour are at the top end of the market, with a bit more pricey products but a nice interior.
So if they would copy their Dutch concept they would be in between these two groups.
In the hunt for good locations AH might be looking to convert existing franchise stores. Or of course something drastic like a acquisition of the Belgian Carrefour operations, which have been in trouble ever since they entered Belgium.
Competition
Sitting around isn't a good strategy for the current players. They did that in the 80s when Aldi aggressively took the low cost part of the market.
The two main competitors that AH is likely to encounter:
The two main competitors that AH is likely to encounter:
- Colruyt: very good results and growth figures due to a focus on good but basic service and low price
- Delhaize: good results with its own stores, sharply priced private label products, opening of Red Market concept stores that focus on low price
So even if Albert Heijn manages to secure good locations, they will have to come with something extra. And pricing right is likely to be a big part of their strategy.
Dutch people are more price-sensitive. Dutch consumers are used to a lot of promotions and retailers use loss leaders to increase foot traffic. These last years AH has been involved in various price wars with its competitors in the Netherlands.
On top of that are a lot of products priced differently than in Belgium. This might give the impression that everything is cheaper, but what is discounted on these products will be made up on others.
One technique that retailers already use is price comparisons. So if they can really compete with AH on a full shopping cart, this will continue.
On top of that are a lot of products priced differently than in Belgium. This might give the impression that everything is cheaper, but what is discounted on these products will be made up on others.
One technique that retailers already use is price comparisons. So if they can really compete with AH on a full shopping cart, this will continue.
If AH manages to gain foothold in Belgium, their pricing policy might cause some uproar.
Would you like to shop in a Belgianized Albert Heijn? Drop it in the comments!
Would you like to shop in a Belgianized Albert Heijn? Drop it in the comments!
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