Dutch supermarket chain Jumbo has opened its first Belgian branch this Wednesday. RetailDetail collected and translated the most important news, analyses and comments from our Dutch-language website into one English language article. The links in this article, for those who want to learn more about the subject, point to the extensive articles on our Dutch language site.
1. Location
Jumbo chose to open its first store in Pelt, a municipality in Northern Limburg on the Dutch border – making the logistics from the Netherlands easy to organise. The other openings that are planned for this year (in Rijkevorsel and Lanaken) are also close to the border. However, many of the stores that are already planned for next year are a little further into the country. This is the case with Deurne (Antwerp), Ostend, South Limburg and South-West Flanders, among others.
There is really no other option: if the chain wants to have around twenty stores by the end of 2020, and one hundred stores within five years, there has to be variation in the locations. Moreover, CEO Frits van Eerd is already looking towards having a present throughout the whole country, including Wallonia: “If you look at the fact that we deliver to Groningen and Friesland: those are at the same distance away as the French border in the south is.”
However, he does not want it to be said that the expansion into French-speaking territory is happening too soon: “We will take it step-by-step: first Flanders, and then we’ll see what else we can do…” Analysts do know, however, that this is not necessarily the truth: a few years ago he had said that an acquisition of Dutch chain C1000 “would not take place for the foreseeable future”, but a few months later, that deal was already done. On the PowerPoint, we could already see the entire map of Belgium marked in yellow…
2. Price
Jumbo offers a low price guarantee in the Netherlands, but not (yet) in Belgium. As far as the chain is concerned, it would seem it is a bit too much to enter a new market at the same time as attacking the market leader… who just happens to have a low price guarantee of its own. Looking at the promise of “low prices, high quality”, and according to the first price comparisons, Jumbo is usually at the same level as Colruyt, but seldom below it.
That is also partly doe to the market leader’s swift response: they sent no less than twenty people out to monitor the prices of the newcomer (and other local competitors). They did not cut corners: on the first day visiting Jumbo, they checked no fewer than 1600 prices – of which only “a few dozen” were actually below the price offered by Colruyt, immediately lowered the prices in question.
In addition, the company had already purchased 4,739 (!) items in order to make the price comparison possible in the first place. “That way, we wanted to be able to make the right comparisons. A jam with 65 % fruit content is not the same as one with 50 % fruit content. A pancake can be made with real milk, or with milk powder and water”, regional director Geert Gillis explained.
3. Experience
It is not Colruyt, but Delhaize and Carrefour who must fear the Yellow Danger, our in-house analyst Stefan Van Rompaey reports. The chance that Jumbo can beat market leader Colruyt on price is very small, but the chance that the combination of low prices and high quality will lure customers away from numbers two and three in the market, is very real. After all, the new store in Pelt “is sleek, but still has a great atmosphere“. Moreover, it features an extensive range of both convenience and fresh products, making it very much aimed at the more ‘up-market’ customer.
If Jumbo manages to deliver Delhaize quality at Colruyt prices, there are only two options for Delhaize and Carrefour. Either go for a higher quality, with all the associated consequences this has on price perception…. or go along with the lower prices, and all the associated consequences for the already eroded margins. Entering a price war, which is not in the DNA for either of the chains, could be problematic for both of them – especially since they have not recently had the strongest years anyway.
4. Product range
Jumbo’s expansion to the south was not an easy task: as many as 3,000 products in the Pelt store are “uniquely Belgian” and not for sale in any other Jumbo – that is about 15 % of the entire product range. On the other hand, the company has also learned a great deal from Albert Heijn‘s Belgian launch, and in particular from the conclusion that there is also demand for Dutch products in Belgium. For the lazy customer, for example, there is a huge range of freshly cut vegetables.
For the time being, Jumbo is not yet taking full advantage of a USP that only they have: since the bankruptcy of department store chain V&D and the acquisition of their La Place brand, Jumbo has had its own chain of restaurants. In Pelt, this is only really visible in a La Place corner, where freshly made pizzas and sandwiches are on offer. It is clear, however, that Jumbo wants to roll out its (much larger) ‘Food Market’ concept in other places in Belgium, with room for on-the-spot consumption of freshly prepared dishes.
About Jumbo
Jumbo is the second largest supermarket chain in the Netherlands (after Albert Heijn), with 675 supermarkets and a turnover of 7.4 billion euros. The group from Veghel became big in the Netherlands because of its “Seven Certainties“, including a lowest price guarantee, which will not be implemented in Belgium. Since the bankruptcy of V&D at the end of 2015, Jumbo also has a hundred La Place restaurants in its portfolio. A striking fact: just like chains like Delhaize and Colruyt, the chain was founded as a distributor of colonial goods.
The current CEO, Frits van Eerd, is not only a retailer but also a real showman: he likes to race (and sponsors F1 driver Max Verstappen) and has already released a carnival single. With this big step for his company, some ‘pomp and circumstance’ was therefore a must:
