If Metro wants to get rid of its loss-making Belgian operations, the question arises as to who the candidate buyers could be. The catering and hospitality wholesalers may have prospects, but what about Makro? Could a large foreign newcomer enter the scene?
Unsustainable
According to Belgian CEO Vincent Nolf, the reports regarding an impending sale of the Belgian stores of Makro and Metro are not based on any solid ground: those are “rumours and speculations to which we cannot comment”, he says. This statement is met with scepticism by most retail watchers. Although parent company Metro would not (yet) confirm the news, the investment bank Rothschild tends to leak news about current affairs.
Moreover, it is evident that the group cannot possibly continue to make up for the increasing losses of its Belgian subsidiary, which are now amounting to hundreds of millions of euros. The company is reviewing all international activities, and only countries that contribute positively could remain in the group. Things do not look promising for the Belgian branch, but if it is indeed up for sale, the question remains: Who will be interested?
Outdated business model
The situation does not look quite so gloomy for the eleven catering and hospitality wholesale stores of Metro Belgium: they are the market leader and were doing well up until the outbreak of the pandemic. Given that the situation is gradually returning to normal, the hospitality industry should be able to recover. There is still plenty of room for consolidation and professionalisation in the industry. Dutch Sligro is tipped as a candidate: an ambitious company that has already acquired ISPC and Java in Belgium.
The problem child is its sibling chain Makro: six mega-stores with an outdated business model in old buildings, an ageing clientele and unmotivated staff – numbed after years of adverse reports and fruitless restructuring. The strategic repositioning launched in 2016 never yielded the desired outcomes. Can such a company ever be sold, even when a dowry gets added? “Staff no longer want to fight for survival”, regional Belgian newspaper Gazet van Antwerpen reported…
Jumbo, Hornbach, Costco?
Belgian business newspaper De Tijd suggests that Dutch supermarket chain Jumbo might be interested in Makro. But that seems doubtful: Jumbo does not require premises of 15,000 sqm, not even for its larger Foodmarkt formula. Even in conjunction with its Hema non-food stores and La Place restaurants, there would still be excess space. Moreover, the locations are not very suitable for a supermarket: they are large destination locations that cannot benefit from passers-by or local residents.
For foreign big-box retailers looking to enter the Belgian market, however, the sale of the Makro stores could be an opportunity. After all, large locations are scarce. For example, the German hardware giant Hornbach, a real category killer, is already active in the Netherlands but not yet in Belgium. As Makro is also an important hardware player, there could be a match with the locations.
Costco is another name that crops up. The American giant now has two stores in France. The chain’s ‘warehouse club’ business model is in line with Makro’s former positioning. However, it is apparent that there are not dozens of potential buyers who will pick up the phone to call Rothschild. The only option left may be to close the books and sell the real estate…
