Can one French and several Dutch managers do what the Belgian management failed to do these past few years at Delhaize Belgium? Its new CEO will face plenty of challenges: we count at least seven.
1. Gain internal trust
Piesvaux will be the very first foreign CEO leading the Belgian company, which is not a bad idea at heart. The new leader will not be perturbed by ideas from the past and can go to work without any form of taboo. However, there is the idea he was mainly installed to carry out orders from the Netherlands, to export Wouter Kolk’s successful Albert Heijn recipe to Belgium. Poignant fact: Piesvaux is labeled as CEO in the Belgian press release, but in the overall Ahold Delhaize press release, his title is “Brand President”.
Will the French native learn Dutch? That would be a first! He will have plenty of work to instill a high moral in his workforce again: several directors already abandoned ship and there is trouble brewing in the stores as well. Labour unions already bared their teeth in the press: they demand the social dialogue is to be respected. Several papers mention a “cultural difference”, but that should not be an issue, because multinationals and expats are part of the FMCG industry.
2. Streamline the logistical machine
The stores’ supplies is often problematic, a longstanding issue. The company cannot handle the high-intensity periods, despite major investments in automated distribution centers these past few years. The new distribution center in Ninove could help solve the problem, but it will only become operational early next year. Piesvaux can tap into his Walmart experience and European pioneer Albert Heijn’s expertise to better organize the supply chain. Looking at it like that, this challenge may prove the easiest to fulfill.
3. Get the stores back on track
Logistics are not the sole reason many Delhaize supermarkets face empty shelves, because the new structure at the integrated stores also falters. This new structure, part of the transformation plan, does not seem to catch on that well. Its execution on store level is sub-par, but employees complain about increased working pressure. The wages also put a lot of pressure on the stores’ profitability.
Delhaize cannot just mimic Albert Heijn’s business model, which focuses on young, cheap student workers, because labour laws and labour unions in Belgium will not stand for it. There are no miracle solutions for this issue it seems, so this will be a hard one to solve.
4. Keep the franchisees on board
Independent stores generate more than half of Delhaize’s turnover and perform significantly better than its own stores. On top of that, they are investing in the future. If the logistical side of the business gets back on track, these store owners will not complain as loudly as they do now. Right now, they are definitely not happy with the shipments.
However, there is more: the franchisees expect an improved commercial approach, with attractive marketing deals, enticing communication and a surprising product range. They also want to maintain a certain level of freedom, the main reason why they are so successful. Dick Boer already stated Delhaize would have to give up some of its liberties, but does that also apply to the franchise stores? Things are a lot more strict with Albert Heijn in the Netherlands, with conflicts even going to court, so it remains to be seen whether a copy/paste operation is a good idea in this case…?
5. Develop eCommerce
Belgium is lagging behind when it comes to eCommerce, and even in that country Delhaize has not been a pioneer. There is knowhow in the group, with Albert Heijn, Bol.com and Peapod: plenty of opportunities, but it would require huge investments that will only have a long-term gain.
The food industry’s online sales are minute at this point, but everyone agrees there will be a tipping point someday and one needs to be ready for it. Ahold Delhaize allegedly sent Dutchman Patrick Daniëls to Brussels, to build an online structure similar to what he created at Albert Heijn's Dutch website. Let’s see what he can do...!
6. Get the suppliers on board
Through Delhaize's strong focus on private labels and its ferocious attempts to become more competitive on price, the company has lost ties with the A-brand manufacturers. The Ahold Delhaize merger did not improve that situation: during infamous talks in Breda, the new merger group demanded better purchase conditions. Based on Albert Heijn’s reputation, it does not seem things will improve anytime soon.
Nevertheless, Delhaize wil need A-brand manufacturers to get sales going again, because price cuts alone will not do the trick. The question is how the Dutch will deal with that one thing that sets the Belgian market apart from any other: Colruyt. This could be exciting.
7. Convince the consumer
Ahold Delhaize recently said in a press release that its goal was to turn Delhaize into the Belgian consumer’s favourite store. The lion lost plenty of its roar over the past fifteen years and Belgian consumers now prefer Colruyt, Aldi and Lidl.
It has to be said: former CEO Denis Knoops did manage to change some things. The remodeling operation for its supermarkets is not too bad, although it still lacks any revolutionary alterations; its product range is on the move (even though it is still not the trend setter it used to be); its commercial approach has improved (although 1+1 deals are very costly). However, all of these efforts have not yielded better results and an increased market share. It takes time, a lot of time, to alter people’s perspective. Time the company basically does not have …