Dutch supermarket chain Jumbo abandons its ambition to have one hundred supermarkets in Belgium by 2027 (which in itself was already a recently delayed deadline). The retailer admits that sales are lagging in some stores and that margins are under pressure, but denies a possible departure from Belgium.
Slower pace
Things are not going as smoothly as hoped for Jumbo in Belgium: rental and wage costs are higher than initially anticipated and net margins are under pressure, temporary CEO Ton van Veen and CFO Peter van Erp told Belgian newspaper De Tijd. The Dutch supermarket chain now says it prefers to grow at a slower pace: the goal still remains to have 100 stores in time, but the company no longer attaches a deadline to this.
Initially, Jumbo’s ambition was to have those 100 stores by 2024 (five years after its introduction into the Belgian market), but later it adjusted that ambition to 2027. To meet even that later target date, the chain still would have to be able to open fifteen stores every year, and that turns out to be unrealistic: this year, too, Jumbo is planning ‘only’ ten new stores in Belgium. Today, the chain has 27 supermarkets there, which together account for more than 200 million euros in sales.
Fierce competition
Because Jumbo has larger stores in Belgium, rents are also somewhat higher there. Turnover, however, does not follow in some stores, the retailer admits: “Competition is tough in Belgium.” Moreover, the Dutch chain could not foresee that inflation would hit this hard: “Before we took the step to Belgium, we saw that the gross margins of Belgian supermarkets were quite high, even if labour costs were also higher. Today we still see the high labour costs, but no longer the high gross margins”, van Veen added.
Nevertheless, Jumbo continues to invest in its Belgian expansion. The CEO says he is surprised by the reactions to the capital increase in Belgium: “Some observers are speculating about us leaving Belgium. That is totally out of the question! New stores are simply not profitable from day one. That is why it is normal for capital to go from the Netherlands to Belgium.” Jumbo will not make a profit in Belgium this year either, but the company hopes to reach that milestone in 2024 or 2025.
