Colruyt gains market share but sees increasing promo pressure

Belgian retailer Colruyt Group sees its revenue and profit rise sharply thanks to price increases, market share gains and a focus on cost control. However, the retailer warns that price and promotional pressure on the Belgian market are increasing again. 

Worst has passed

The better-than-expected half-year figures that the retailer published on Tuesday evening appear to say that the worst has passed for Colruyt. Its revenue rose by 16 % to almost 5.5 billion euros, operating profit more than doubled (from 108 to 246 million euros) and its margin rose from 2.3 to 4.5 %. Returning and new customers in the stores pushed the market share of the supermarkets (Colruyt, Okay and Spar) up from 30.9 % to 32.1 %. In addition, the retailer was able to limit the increase in operating costs through an increased focus on processes, cost control and efficiency.

Colruyt – famous for its lowest price guarantee – was (only) able to increase selling prices last semester because its competitors did the same. Now, the retailer says it is experiencing rising price and promotional pressure again on the Belgian market. Competitiveness is increasing again, which may explain why the retailer is playing hardball in the ongoing annual talks with its brand suppliers: products from Unilever and Mars are currently missing from stores, after a dispute over prices with AB InBev finally led to an agreement.