The end of Belgian supermarket chains Match and Smatch raises renewed questions about Louis Delhaize Group‘s future. In particular, the fate of the seven ailing Cora-hypermarkets seems doomed.
Continued losses
It has long been clear that something needed to be done at Louis Delhaize Group (not to be confused with the Ahold Delhaize group, although the latter’s Belgian branch was founded by the same family), after years of almost continuous losses. After the Bouriez family sold the Romanian and French operations to Carrefour and the Luxembourg operations to E.Leclerc, the sale of most of the Match and Smatch supermarkets to Colruyt Group was therefore not too big a surprise.
But the group has other operations in Belgium: wholesaler Delfood supplies some 150 convenience stores under the Louis Delhaize brand, meal shop chain Delitraiteur has some forty outlets (and seemed to be on an expansion trajectory in recent years), and finally there is hypermarket chain Cora. Its seven stores with some 2,000 employees have been losing money for quite some time.
Outdated concept
Seven is almost as many as Makro stores had before its bankruptcy. The similarities between the two companies do not end there: much like Makro, Cora is a somewhat outdated store concept. The very large hypermarkets based on the French model may offer a very rich product range, but they no longer meet the expectations of today’s (and certainly tomorrow’s) consumers, who put convenience first. While Carrefour is downsizing its hypermarkets and turning them into really big supermarkets, Cora has stuck to the traditional hypermarket model.
There have undeniably been attempts to modernise: the company carried out a reorganisation and revamped the store concept with more focus on experience and sharper assortment choices. The chain increased its focus on its unique wine offering, for example, with revamped racks and a digital wine fair. Moreover, the chain put more emphasis on its wide range of fresh, organic, world cuisine and baby care products. These choices all went in the right direction, but have not made much of an impact. And now time is running out.
Any takers?
Continuing to put money in a seemingly bottomless pit is no longer an option for the Bouriez family that owns the Louis Delhaize Group. Now that the international operations have been sold, the retailer has no European buying power, no scale, no prospects. Seven hypermarkets in tiny Belgium are just not enough make it – mainly because fixed costs are very high, and heavy investments are still needed, with no guarantee of success. The family is now looking for an interested party to acquire the chain, but who will take that risk?
Carrefour certainly has other priorities, and while E.Leclerc did take over the stores in Luxembourg, the question is whether the French number one is keen on a Belgian adventure – especially if that means taking over outdated shops in an already overcrowded market. Moreover, this also risks a new social conflict around the franchising of the Cora stores, as E.Leclerc is a grouping of independent entrepreneurs. Operating the Shopping Cora malls further complicates matters.
Bankruptcy looming?
The trade unions therefore already see the sword dangling: even after collective redundancies for the head office, Cora faces bankruptcy if a buyer is not found soon. Myriam Delmée of the socialist trade union SETCa already spoke openly in the press about the possibility of a scenario like that of Makro. Consequently, the mood among the employees involved is anything but optimistic.
For the Delfood and Delitraiteur business units, which seem to have more of a fighting chance in the future, a worst case scenario seems much less likely. Here too, however, it would be better for all stakeholders that a decision is found as soon as possible. The weeks ahead will be exciting, for sure…
