Delhaize has to save extra due to rising costs

High inflation puts pressure on Delhaize. Due to the fierce competition in our country, the supermarket chain may raise its prices less than foreign sister chains. The unique Belgian wage indexation also affects Delhaize. There is only one solution: Save extra.

The operating profit of the Dutch retail group Ahold Delhaize fell by a third in the first quarter of the year. The retail group of Albert Heijn, Delhaize and is struggling in all its markets with the rising cost of high inflation. In addition, sales are falling because coronalockdowns, where supermarkets did golden business, are behind us. Belgium outperformed the Ahold chains in the Netherlands, the United States and south-eastern Europe. The Dutch call Belgium a ‘challenging market’.

Delhaize faced top inflation with relatively low profitability. For years, the group has underperformed its European sister chains, which last year had a profit margin of 3.4 percent. The goal set by CEO Frans Muller three years ago has not yet been reached: By 2022, Delhaize should reach a ‘thick 3 percent’ margin. Delhaize keeps the exact profit numbers secret. The chain confirms that it also lost market share in the first quarter.

Delhaize and Albert Heijn will purchase more home products together to reduce costs.

Inflation hits Delhaize harder than its foreign sister chains. Goods and energy cost the chain much more than last year. At the same time, wages are rising sharply because automatic wage indexation in Belgium means that they are following inflation faster than abroad.

Delhaize is having a hard time overcoming its rising cost of raising store prices. ‘Belgium has many supermarkets, so the competition is very fierce,’ says Delhaize spokesman Roel Dekelver. The sister chain Albert Heijn is putting pressure on the market in Belgium by being frugal with price increases, a recent study from De Tijd showed.

An uncomfortable situation for Delhaize? ‘I can not get into that, because I only speak for Delhaize,’ says Dekelver, whose chain raised its prices more than its competitors earlier this year. ‘I notice that other chains have raised their prices more than we have done in recent weeks. A sign that the market is stabilizing. ‘

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In response to the problem, the Dutch head office announces that there will be additional ‘cost savings’ in Belgium. “We should not save, but focus on costs,” says Dekelver. ‘We will print fewer documents and allow trucks to run more efficient routes.’ Dismissal of staff is not on the agenda.

Albert Heijn and Delhaize will also buy more products together. By placing orders together and buying large quantities, both companies can encourage their suppliers to take lower prices. Albert Heijn and Delhaize have been buying some private label products together since they became sister chains in 2016. The chocolates and cosmetics from the private labels Delicata and Etos are for sale at both Delhaize and Albert Heijn. But more is obviously possible.

Will the selection of Delhaize and Albert Heijn be more similar? ‘We want to ensure that the range remains significant enough,’ says Dekelver. »Products like toilet paper and toothpaste are not very distinctive and we can buy them together. And you can work with one supplier, but each buys different products. ‘

Shrinking goes to the stock market ‘without urgency’

The fact that the stock market climate has not been very good in recent weeks and months, certainly not for technology stocks, does not prevent Ahold Delhaize from listing its online store “We are making good progress in our preparations to have ready for a partial IPO in the second half of 2022, subject to appropriate market conditions and other factors,” said Ahold Delhaize spokeswoman Isabelle Meltzer. She seems to be upset about the timing. ‘ is a well-funded company with a strong balance sheet. So there is no extremely high degree of urgency. ‘ saw its revenue fall by 7 percent in the first quarter to 1.3 billion euros. The comparison is based on a very strong first quarter in 2021, the company emphasizes. Thereafter, sales increased 76.6 percent, thanks to corona lockdowns. Ahold Delhaize also points out that also outperformed other online stores in early 2022. According to the company, the market shrank by 16 percent.

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