Belgian supermarket chain Delhaize has announced it wants to sell all its integrated supermarkets in Belgium to independent franchisers. In doing so, the chain aims to become more profitable in a hyper-competitive market.
At a meeting with the unions this morning, Delhaize announced plans to spin off all 128 integrated supermarkets in Belgium in order to lower operating costs and ensure more flexibility. The plans may affect wages and working conditions for 15,000 employees, but – according to the retailer – there will be no impact on employment, as all store staff will make the transition to the new independent operators.
“We see that consumer behaviour is changing, there is more demand for flexibility, and we have to admit that in the competitive retail market our own stores are declining in terms of profitability and market share, while our independent operators are growing. We hope to re-engage with growth with this decision”, spokesman Roel Dekelver told RetailDetail editors. The combination of Delhaize’s expertise with the franchisers’ entrepreneurship should make sure this happens: “We are convinced that our strategy is right.”
Shops will remain Delhaize
The change will eventually also have an impact on employment at the head office, where a few positions will be discontinued. However, this is not yet concrete. The transition will take place step by step, starting with an information and consultation round with the trade unions. All shops will keep the Delhaize brand; there is no question of a switch to fellow Ahold Delhaize subsidiary Albert Heijn. Moreover, the shops in the Grand Duchy of Luxembourg will not be affected by the operation.
The trade unions have already ventilated their anger at the bombshell, but it does not quite come as a bolt from the blue for many observers. Delhaize had already terminated the collective agreement on shop organisation. Margins at the Ahold Delhaize group are under pressure across Europe, and Delhaize is the underperformer within the group – although it is still (slightly) profitable. With high costs for wages and operations, the company cannot compete with foreign newcomers with a structurally lower cost structure.