During the first six months of its broken financial year, Belgian Colruyt Group saw its profit decrease by one third as a result of increased price competition. The market share of the supermarket activities remained stable.
Increased competition
Colruyt Group achieved a turnover of 4.9 billion euros (- 0.2 %) in the first half year, indicating that volumes in the food stores were under pressure as a result of the relaxation of the COVID-19 measures and the ending of non-food sales through Collishop. The turnover of the retail activities decreased by 2.7 %, that of the Colruyt stores even by 4.9 %. OKay, Bio-Planet and Cru saw their turnover decrease by 9.6 %. Wholesale – including the Spar proximity stores – fell by 5.8 %: the strong growth for local shops during the lockdowns is now also over.
Nevertheless, the market share of Colruyt Lowest Prices, OKay and Spar combined remained stable at 31.0 %. Due to increased competition in terms of price and promotions, however, the gross margin fell sharply and profits were down by one third. In the previous financial year, the margins were significantly higher due to a temporary ban on promotional campaigns. Online sales – mainly through the Collect&Go shopping service – continued to grow and now account for 8 % of retail sales excluding fuels. In France, Colruyt’s sales increased by 7,7 %.
Limiting price increases
The retailer does not expect immediate improvement: competition increases and the market remains challenging, both in terms of price and promotions. On top of that there is rising inflation and rising costs – including a corona bonus for staff. The net result will therefore “show a significant to strong decrease compared to last financial year”, says the press release.
However, the company emphasises that it will continue to implement its strategic choices consistently. “The consumer’s financial situation is something that Colruyt Group feels very strongly about. Colruyt Lowest Prices will therefore continue to consistently implement its lowest price strategy. The group will limit price increases as much as possible, by thoroughly analysing every price increase request and by entering into consultation with the suppliers”, the retailer says.
