Knowing that convenience stores are becoming the main battlefield in the Belgian supermarket sector, Delhaize‘s acquisition of Delfood may well be a very significant move. Undoubtedly, a few competitors feel they have missed a major opportunity.
1. Key potential for growth
Convenience stores are still a growing segment, while the supermarket landscape reaches its saturation point. Complementing larger supermarkets by catering to spontaneous shopping, convenience stores – especially in city centres – present new opportunities for expansion. Many of Delfood’s outlets are strategically located in high-traffic areas, such as petrol stations, train stations, and even airports. These are key areas that still offer substantial potential for growth.
2. Growth spurt
This acquisition adds 325 outlets to Delhaize’s portfolio, bringing its total number of Belgian stores to over a thousand. This expansion allows Delhaize to match Carrefour Express’s network and surpass Colruyt Group, which plans to open around a hundred Okay City stores to increase its presence in city centres. 25 of the stores are company-operated, which may seem like a strange acquisition after Delhaize’s controversial choice to franchise all of its own stores in 2023. However, this is not seen as a drawback: suitable franchisees are expected to be found rather easily for these locations.
3. Profitable categories
The convenience store segment benefits from reduced price competition and offers high-margin products, such as fresh ‘on the go’ items like salads, sandwiches, snacks, and beverages. Combining Delhaize’s and louis delhaize‘s expertise in these categories is anticipated to enhance their market offerings.
4. Financially sound
Delfood is one of the more robust divisions of the financially troubled louis delhaize group, reporting an operating profit of approximately 120,000 euros on a turnover of 25 million euros. The stores and their operators have solid reputations and proven track records, suggesting that increased scale could further improve performance.
5. Trusted brands
The louis delhaize brand, with its historical ties to Delhaize, will be retained. CEO Xavier Piesvaux notes that Louis Delhaize, the namesake of the chain, was a brother of Delhaize’s founders. Maintaining the louis delhaize brand allows it to operate as a distinct entity with unique characteristics, potentially avoiding territorial conflicts with existing Proxy and Shop&Go stores.
Obvious side note: Belgium’s competition authority has yet to decide whether this acquisition endangers free competition. It is expected that the ruling would follow later this year.
