Upon entering Colruyt's headquarters in Halle (near Brussels), the discounter image clearly shows. No luxury or comfort, only efficiency: much like its mission statement “efficient shopping for the lowest price”.
RetailDetail interviewed Jean-Pierre Roelands, commercial director, about corporate social responsibility, Colruyt's future... and the lowest prices, of course.
Colruyt currently has 225 Colruyt stores, 71 Okays and 7 Bio-Planets. Can you still expand?
We still can add up to 50 stores to our empire, and we plan to do so in the next ten years. Our long-term vision includes four store openings each year. A study showed we need between 270 and 280 stores to cover Belgium optimally. That should ensure that every Belgian lives at maximum 10 minutes driving from his nearest Colruyt.
Considering the current traffic congestion problems, we find this particularly important. People have started thinking in terms of minutes, not in kilometres. Reachability and proximity have become very important.
And expansion abroad?
In Belgium, everybody knows Colruyt. That is not the case in other countries, but we are working on that. We notice that, after long and hard work, our recognisability in France is growing. It is still a long way to go, but we are going to open new Colruyts there, alongside our other activities.
RD: There are also rumours about Spain...?
We are always looking out for new opportunities. Spain could be interesting, as it is a neighbouring country of France, where we already are active. But we are not desperate for international expansion, we rather do nothing than do something without good preparation. We are not desperate for international expansion, there is no deadline.
Spar, your competitors, are very ambitious. If they grow, that has to be at your expense, one way or another?
It is true that we will not suddenly start eating significantly more, so there is a limit to the growth of the market. The market is changing instead of growing: people are looking for supermarkets close to their home, but also for different opportunities. The reason why people go to Colruyt is not the same as the reason why people go to Spar or Okay; which is exactly why we want to be on the market with several different formulas.
Do you think Carrefour could regain the top spot in the Belgian supermarket rankings?
Everything is possible, and I wish them the very best. Our ambition is not to be the biggest, our ambition is to be the best. We want to create an added value by growing and evolving; if that growth means we become the biggest, it is a nice side effect but nothing more than that.
We want to be the best in what we do: offering the lowest prices. That is not just our slogan, it is our mission statement, and we have built our entire organisation around it. Take that away from us, and you might just as well close us down. Luckily for us, we are very good at it. Look at Carrefour: they have tried to beat us in our own game, but they had to admit defeat.
Our claim to fame is very clear: we offer the lowest prices. It is a clear, transparent and readable statement; you can always easily put us to the test. Others have invented slogans like “honest prices” or “best prices”... but that's not transparent. What does it mean?
So... How can you live up to the claim?
Because of this clear statement. Our customers can easily see whether or not our claim is true and they can – and they WILL – let us know if it is not. Our customers keep us sharp: a few years ago, we had an angry call from someone saying “You say that you lower your prices immediately when a lower price is reported. I have called you twenty minutes ago and I am in your store now, but the price is still the same”. Before that, we adapted our prices only the day after, but the lady was right: our ad said “immediately”. Since then, we have installed printers in every store, so we can adapt our prices immediately all over the country.
We employ 70 people who enter almost 66000 prices in our IT-system every day. We have been working on that system for over 30 years, and now it allows us to read others' brochures and promotions and adapt our prices when necessary, before the stores open.
When you have such a clear claim, you can be easily attacked, but also easily defended. We notice that, when Colruyt is attacked in the media, our customers respond to that themselves. They are becoming our ambassadors, in a way.
We have noticed that retailers' own brands are becoming more important, to the point that B- and C-level brands will be forced out of the market. How are you reacting to that?
We are aware of this evolution, but we do not want to turn that into a revolution. We adapt our brands to what customers ask, but that is complex. One customer can have different needs, while there are so many different customers too. Some people are looking for an A-level brand at the lowest price, others want a quality product without unnecessary frills. During the last crisis, people have found that we offer both, which is how we have gained many new customers.
But if the trend goes towards more own brands, you will have to follow that?
You should not infer that we have no own brands. On the contrary: we had six or seven, but that created an unclear situation. Now we are trying to reduce it all to one best price brand: Everyday.
In their category, Everyday products have the lowest price, but still keep an acceptable quality. If we perform tests on our products, we see that their quality is as good as, or even better than, competitors' products. We owe that to our customers.
It makes no sense that Delhaize claims we are afraid to add our brands to the price comparing lists. If we add our own brands and the national brands to that test, the difference with the competitors will be even bigger!
Delhaize claims that their own brands are cheaper.
Cheaper than the national brands, but that is obvious. Every own brand is cheaper than the national brand, with a few exceptions maybe. Our own brands are not in the test, to keep the comparison simple. Compare Delhaize's 365 with our Everyday or Carrefour's Nr 1. National brands are more expensive, of course.
I can not agree if Delhaize claims they are cheaper. There are different ways of calculating that, and you can not easily and transparently calculate price differences when you have different sizes.
What is Delhaize doing wrong?
Delhaize counts our price of national brands and compares with a mixture of national and own brands for their customers. While it is true that their customers buy more than just national brands, that is also true for ours.
One clear example: Delhaize claimed to be cheaper for Martini, but they compaired their own brand Lambertini with our Martini. Had they compared Martini at Delhaize to Martini at Colruyt, we would be 5 cents cheaper (€4.38 v €4.33). And had they compared their Lambertini to our Mazzarelli, the difference would be almost one euro (€2.69 v €1.75).
And their argument that you do not use nationwide prices?
Of course we do not. For example, Brussels is a lot more expensive than the countryside, obviously. We guarantee the lowest prices of the region, but there is no reason whatsoever to lower our prices in Bruges to respond to Albert Heijn's introduction in the north of Antwerp. Besides, they have left their national price policy too, to compete with Albert Heijn in Brasschaat.
Now you bring them up: Albert Heijn claim to have the lowest prices too. Will they be included in your price tests too?
At this point: no. Albert Heijn is not important enough, so far. The investment is not worth it, but that might change in the future.
Do you think Albert Heijn stands a chance?
We have learnt not to underestimate our competitors. People at Albert Heijn know what they are doing and I respect them fully. Still, it will not be easy for them: it is very difficult to get over the local differences, as we have seen with Intermarché.
You also have to face the facts: the big three cover three quarters of the market. Add Aldi and Lidl to that, and you have a coverage of 90%. If Albert Heijn wants to invade Belgium, their growth will be at someone's expense. And believe me, we are ambitious too, we will not give way.
Honestly, I do not think that AH will settle for 5% of the market. I personally think they will consider taking over someone.
How about the hard discounters? Are they included in your tests?
Yes, we include comparable articles for Aldi, Lidl, Delhaize and Carrefour. Compared to us, Aldi and Lidl are 10 to 12% more expensive. Our price comparisons state that the price difference with Aldi and Lidl is bigger than the difference with Delhaize and Carrefour.
Remarkable. Can you say how your famous price comparisons work?
We compare prices that are valid on a certain day, in the stores of those four chains close to one of our stores. We check prices for vegetables, fruit, meat, national brands and own brands, starting from our own assortment.
And what do you do with different volumes?
If they are in any way comparable, we will take them into account. Of course, we will not compare a bottle of 5 litres oil with one of 1 litre, but if the difference is 1 litre v ¾, we will look at the price per litre. It is exactly for that reason that the law says we have to include the price per litre on supermarket labels.
Prof Fitch says: “Only one can be the cheapest. The others have to do something different.”
We are the cheapest AND we are different. We offer the lowest price for quality products, even if that is contradictory at first sight. We do that by cutting our costs, we reduce everything to its essence. Sometimes people ask me which expenses we want to cut; my answer is: 'If you don't eat too much, you don't have to start a diet.' We can only have the lowest prices, if we have the lowest costs. Our turnover per square meter is twice that of an average supermarket, our investments per square meter are half that of an average supermarket.
How will Collect&Go evolve, in your opinion?
We can see that it satisfies a need of many customers. When we started, we thought it would mostly attract families with two working parents who want to shop quickly after work, but we notice that it is equally successful on Saturdays. The customer wants to spend his time on fun things, not on supermarkets.
The prices of raw materials are rising, because of growing demand in developing countries. Is that a threat for you?
The importance of prices of raw materials is overrated. To give one example: the price of pork. A pig costs only 23% of the price the consumer pays. To give another one: exactly the same bottle of water costs 77% more in Belgium than in France, while the only difference is taxes. In spite of our “United Europe”, every country still has its own tax system, level of staff costs etc. Comparison between countries is therefore very difficult.
It seems that the Colruyt family is moving to the background?
I would not say that, but it is true that the group has arrived at a very important point. We started as a group of supermarkets, but now Colruyt Group is a holding with other retail brands as well, all trying to find their place in the market. This evolution asks for a different kind of structure.
We aim to keep growing on the Belgian market, but not at all costs. We want to be a group that is driven by its values. We want to create an added value, but only in a sustainable way. In this world of social media, you are immediately confronted with whatever you do wrong. If you do not deliver quality, and just as well if you do not behave sustainably.
That explains the choice to eliminate a few Asian suppliers?
Yes. We are not against Asian suppliers in se, but we want more than just a good price, or even more than a good price plus good quality. Our decisions are measured by economical profitability, but also by social and ecological acceptability. If either one fails to meet our standards, we don't do it. You can offer us the most beautiful ecological project ever, but if it is not lucrative, we will not do it. We have to be able to resist when others are attacking us at our field: the lowest prices...