Sometimes you have to search a part in your supermarket for what you want. ‘Where is the pesto, and do they also have vegetarian croquettes?’
The supermarkets will know that. They should also look for takeover candidates. It is also possible to open your own stores to grow, but it does not go that fast. The biggest problem for supermarkets on the takeover road is that they have often found chains that they would like, but they are either not for sale or they are not allowed to buy them from the competition authorities.
There is a simple reason why supermarket chains want to get bigger: economies of scale. The bigger you are, the cheaper you can buy and the more you can distribute the costs to, for example, the head office or the distribution center between your stores.
Larger means that your costs per. product is lower so you either earn more or you can lower the prices for the customers so that they become even more willing to shop with you.
Smaller chains bear the costs of, among other things, automating their distribution center and e-commerce. It was reason for Deen to throw in the towel and sell the stores.
Now a lot of money in cash
“Companies like Jumbo now have a lot of cash in hand because supermarkets have been running well lately. It also means that owners of smaller chains can now cash in,” says Rini Emonds, who is involved in retail at analysis firm IRI. And the fewer chains that can be taken over, the higher the price, says retail expert Paul Moers.
Jumbo and Plus in particular would like to buy other supermarket chains in the coming years, supermarket experts expect.
Albert Heijn is by far the largest in the Netherlands with a market share of around 36 percent. It is difficult to grow through acquisitions because in some places consumers so quickly have too little choice, which means that the Dutch Consumer and Markets Authority (ACM) will not readily agree to a takeover.
Regional chains are takeover exchanges
Jumbo and Plus are, apart from the discount stores Lidl and Aldi, the two other supermarket chains active throughout the Netherlands, but they are still a lot smaller than the Zaan chain. Jumbo had 21.5 percent of the market last year and Plus is at more than 10 percent after the merger with Coop.
There are also a number of regional chains in our country, and they are all a potential takeover bid, Moers believes. Interesting about many regional supermarkets is that they often have strong local positions.
Jumbo missed a battle in North Holland
On Monday, the takeover of the North Dutch supermarket chain Deen by Albert Heijn and the also North Dutch chains Dekamarkt and Vomar was approved by the competition authorities.
North Holland was just a region where Jumbo was originally from Brabant, not so strong, and they must have looked with gravel on when they missed the boat in North Holland, Moers suspects.
Vomar and Dekamarkt
“But how long will Vomar and Dekamarkt (which is also located in Gelderland in addition to Noord-Holland) remain independent”, wonders supermarket expert Erik Hemmes.
According to him, the acquisition of Deen stores (22 of Vomar and 19 of Dekamarkt) is a nice reinforcement, but he also expects them to be even more interesting acquisition candidates.
It makes a difference for Plus that, like Vomar and Dekamarkt, it also buys via Superunie. Then you sit around the table more often with a beer, so there is a chance that a takeover will be discussed, says Moers.
Purchasing with Superunie
The owners of other regional chains, such as Boni (mainly active in Utrecht and northern Gelderland), MCD and Boon’s Markt (mainly in South Holland and Utrecht) will also in the coming years consider whether they want to remain independent, whether they join Plus / Coop or whether they sell the stores, expects IRI consultant Emonds.
Nettorama (active with discount stores in North Brabant) fits Dirk perfectly, says supermarket expert Moers.
Hoogvliet (mainly active in South Holland and Utrecht) is also an interesting player, he thinks. But Hoogvliet has a construction that prevents it from being taken over, Emonds says. Hemmes wonders what happens when the current big man Leen Hoogvliet dies.
‘Like in North and South Holland’
Nettorama and Hoogvliet also buy through Superunie, as do Poiesz, which is mainly located in Friesland and also in Groningen and Drenthe, and Jan Linders (mainly active in Limburg and eastern North Brabant). They are certainly also a takeover booty, Emonds sees.
Nevertheless, he thinks that retail chains in North and South Holland are more interesting because the stores there are often larger, and the turnover per store is therefore also higher.
Plus works primarily with independent retailers, but according to Emonds, this does not have to be an obstacle to buying branches (which are from the supermarket chain itself) from other players. Coop, which has been merged with Plus, also has a number of branches. Emonds believes that Plus and Coop will primarily be busy transforming Coop stores into Plus in the first few years.
Plus can also grow by buying Sligros 45 percent of Spar, Hemmes believes. Plus already has 45 percent, and the remaining 10 percent is at independent dealers.
A retail chain does not necessarily have to be bought by one other competitor, the stores can also be distributed by several players, as was the case with Deen, according to Moers.
Are families ready for sale?
Ultimately, families must also want to sell and it depends in part on whether there are successors within the family or whether the current peak can continue for a while.
In addition, families often also own part of the property, which also generates income. It requires much less attention, and the question is what they prefer, Hemmes concludes.