In the significant fourth quarter of 2020, market leader Colruyt once again lost ground. The winners are Delhaize, Carrefour and Lidl. A consequence of the current Covid pandemic, or is there more to it?
Shifting the balance of power
Last week, both Carrefour and Delhaize reported they gained market share on the Belgian market in 2020. According to Carrefour, it finished the Covid year with an 18.2 per cent market share, an increase of 0.4 percentage points. Delhaize finished with 24.41, a growth of 0.41 percentage points. During the fourth quarter, which has been crucial for food retailers, Delhaize would have gained 80 basis points.
But what did market leader Colruyt do? Normally, they only publish an update in the middle of June, but Belgian newspaper De Standaard found out that the market leader again lost 1.1 percentage points during the end of year period. Over the entire calendar year – which does not coincide with the broken financial year – Colruyt lost one percentage point. Lidl is also gaining ground, while Aldi is struggling. The figures concerning Albert Heijn are unknown, but given its strong expansion, this player can only gain. Slowly but surely, the balance of power is shifting, although the number one still remains firmly in the saddle.
Behavioural change
There are several reasons for Colruyt’s loss of market share. Since the lockdowns, consumers’ buying behaviour has changed quite drastically: they shop locally more often, for instance, because they work from home and therefore do not drive past a (large) supermarket on their way home from work. Retailers like Carrefour and Delhaize are very strong in the local store segment, while discounters also profile themselves as local shops to some extent. Spar and OKay, Colruyt Group’s local store brands, are doing well but are relatively small players.
In addition, the closure of the hospitality industry and club life meant that professional customers stayed away from Colruyt. Price perception was dented by the temporary promotion ban – although the market leader has meanwhile more than rectified this shortcoming. The big question is whether consumers will return to their old buying habits from this summer onwards. Or will the behaviour change be long-lasting?
Years of truth
If that were to be the case, it would mean bad news for Colruyt. In a market with an increasing number of competitors, the turnover per square metre is under pressure anyway. And, productivity is an essential parameter for cost-conscious retailers. One could question whether Colruyt, with a store concept focussing strongly on large purchases and volume discounts, is not neglecting the growing group of singles and small families. The competitors also seem to be responding more quickly to trends such as healthy, organic and vegan food items – it cannot be a coincidence that Colruyt is now sponsoring the Vegan Challenge: they have some catching up to do.
Until now, Colruyt Group has not shown any signs of weakness: the financial results have been impressive time and time again. But the question is: how long will this be the case? The upcoming two years will be years of truth for Colruyt – and consequently for the entire Belgian food retail industry.
