In 2022, I predicted that Jumbo would abandon Belgium again – an analysis they did not appreciate in the Veghel headquarters. Nonetheless, it had solid reasoning behind it. The retailer is looking for a new interpretation of its famous 7 Certainties, but above all it is grappling with 7 Uncertainties. Why Jumbo should consider an exit from Belgium, or not…
Spoken like a fan
As a supermarket fan, I was very excited that Jumbo was coming to Belgium in 2019. I thought – and do still think – Jumbo is an exemplary company. However, they came at the most difficult time possible, and losing a frontrunner like Frits van Eerd (who stepped down in September 2022) made the task even harder. And then, three months later, the founder of the family’s empire Karel van Eerd died…
1. Dutch arrears
Jumbo’s sales did grow 7.3 % in 2023, but that hides another truth. The Dutch runner-up has performed worse than the market (which grew 7.6 %), meaning that the chain lost market share for the second consecutive year. Net profit even fell by almost three quarters last year, and fell from 147 million euros in 2020 to 114 million, then to 80 million, and now stands at a paltry 22 million. If this trend continues, a dive below the zero-line is imminent.
Moreover, Dutch supermarkets will no longer be allowed to sell cigarettes from this summer. The loss in sales could be as much as 5 %, or the total equivalent of three shops. That is a huge hole to fill, especially if – like Jumbo – you hardly ever open any new shops. Not to mention the loss of profit associated with the disappearance of such a high-margin category. This, in turn, means there is not too much money left to fund further growth.
2. In search of meaning
Jumbo has abandoned its famous 7 Certainties and CEO Ton van Veen wants to get back to basics. However, the new slogan leaves much to be desired: “Jumbo as Jumbo is meant to be”. But how should it be? The 7 certainties were very clear and concrete for the customer. Jumbo as Jumbo is meant to be… fill in the blanks yourself.
3. From 100 to 50 stores in Belgium
Instead of aiming for a hundred stores by 2025, Jumbo has halved that goal. General manager of Jumbo Belgium, Peter Isaac, admits himself that: “appeals are systematically lodged, almost literally for every project – and then again when the first appeal is rejected. This represents a delay of up to a year and a half each time.”
It seems that there are still a lot of projects in the pipeline, particularly through franchises. But on the other hand maybe some loss-making shops will also have to close? The first one is already down, how many still to go? There are too many stores with F’s for fail on their report card. Van Veen has previously admitted that there are still branches that are not performing well, and he is not ruling out further closures.
4. The annual Christmas gift
To finance the adventure in Belgium, Jumbo sends a large cheque to the Belgian subsidiary every year: 20 million euros in 2022, even more in 2021. Will the Belgian operations receive such a gift again, now that the profits in the Netherlands have been crashing down?
5. Losses on the horizon
So far, Jumbo Belgium’s sales have grown at a steady pace, but this is due to the opening of new shops. Losses reached remained fairly limited at 4.1 million: an improvement on the 6 million loss recorded a year earlier, but the retailer has admitted that it will not be profitable for some time to come.
6. Stalemate in scale
Even if it wanted to, can Jumbo turn back the clock? After all, with 33 shops today, the cost of a withdrawal from Belgium is also rising ever higher. At the same time, at the start of its Belgian launch, Jumbo was doubtful that even the expected hundred stores were enough to reach profitability. Now that the aim has halved, the question of scale returns even more prominently. Too small to stay, too costly to grow: a real stalemate.
7. For sale
CEO Ton van Veen says he wants to stay in the business for many years to come, but the question is whether the family wants him to. Might they consider selling its troublesome asset? Among the rumoured takeover candidates, the names of German Edeka (which is in some of the same purchase alliances) and Belgian Colruyt are circulating. However, the latter is known to be a cautious spender: would it dare to open its piggy banks for such a big gamble?
Peter Isaac: “Belgium is a certainty”
Isaac has a different viewpoint: “For us, there are no uncertainties. We know we are on the right track”, the head of Jumbo Belgium reaffirms the situation. “Sales are increasing and customer satisfaction is rising spectacularly”, he sees no compelling reason to leave. He believes that the franchising also works: that business model – and the passion of entrepreneurs – are important assets.
“It is still an uphill battle, but we are confident of success”, Isaac concludes. Despite the difficult economic situation and the pressure on the Dutch parent company, he says that leaving Belgium is not an option. He therefore advocates a level playing field, in which competitors give each other a chance. “Because we are here to stay.”
