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Written by Stefan Van Rompaey
In this article
  • Companies Delhaize
  • Topics Marketing
  • Geography Belgium
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[In depth] Why customers gave Delhaize’s brand positioning an uppercut

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Food17 November, 2023

Franchisees of Belgian supermarket chain Delhaize face a very tough task, as their brand has badly been damaged in terms of differentiation, brand identity and price-quality perception, an analysis by WPP Belgium shows.

Precarious

Delhaize has had a turbulent period in the wake of the cost-of-living crisis: the announcement that it would divest all its own shops to independent operators did not go down well with unions and staff. It was not a bad strategic choice, Johan Hellemans of WPP Belgium thinks: “After all, consumers expect more flexibility and convenience when shopping nowadays, and that was a lot harder to achieve with the large company-operated shops. With this shift, Delhaize hoped to adapt to being in a very competitive retail sector.”

However, the situation after the announcement can be described as precarious for a giant brand like Delhaize: “Clearly, this is mainly on the back of the negative news around brand franchising. Indeed, in addition to the decline in brand strength – a trend in just almost all established large chains – we are seeing a number of unfavourable signs that which we largely only see in Delhaize”, Hellemans told RetailDetail.

“Uppercut from consumers”

WPP’s measurement tool BAV (Brand Asset Valuator) has come to these conclusions by distinguishing six ‘brand personality factors’ applicable to all brands, based on brand associations that are then plotted in a ‘personality radar’. This helps identify a brand’s current position and serves as a tool to identify the desired position, diagnose gaps and develop strategies to achieve the desired state.

“For most retail categories, the factor openness is a basic expectation: things like approachability, friendliness, simplicity and convenience – basically ‘being close to the customer’. Precisely on that basic factor, the brand got an uppercut from the customers. In the field of innovation and dynamism, less basic points but clearly factors where Delhaize wants to differentiate itself, the chain has also started to underperform. This is rather unfortunate, as it is precisely on those criteria that the retailer strongly wanted to improve with the divestment of their shops.”

Overly price-oriented communication

“In addition, we see that the price-oriented campaign used to show customers that Delhaize could be cheap did not come across as very credible to customers. It is important to fit price into the brand’s DNA, but also to communicate possible price and promotional adjustments in a way that does not destroy future brand value.”

Delhaize failed miserably in this regard, Hellemans said: “Delhaize’s perception in terms of value for money deteriorated heavily. Delhaize had always been right in this criterion despite being (perceived as) more expensive, because it always has been associated with quality and allure. Therefore, the risks of an excessive price-oriented communication were especially big for Delhaize.”

Loss on three fronts

In an exclusive analysis for RetailDetail, WPP has uncovered a loss on three fronts for Delhaize: a loss of differentiation, a loss of brand identity and a drop in price-quality perception. “It is clear that franchisees face an uphill struggle to regain confidence and differentiate their shop from competitors on the Main Street”, Hellemans elaborated. The unions have to reconsider their position: they have compromised the future of their own employment, fearing that employment in a franchised store would not be as qualitative. However, we are nearing the point of no return: it is crucial that Delhaize supports the franchisees from within the group, with a good long-term strategy and positioning. More and more often, brands seem to care mainly about the tactical moves, but the long-term strategy and brand positioning are forgotten. That trend is regrettable”, Hellemans points out.

“Delhaize has never been the cheapest”, he adds: it has to fight a market leader in Colruyt that actually features a lowest price guarantee as its USP. “In this competitive market environment, it is therefore crucial for a brand like Delhaize to continue to focus not only on price, but also on quality and offer to confirm its distinctiveness. In my opinion, the role of staff and the service offered plays a crucial role in this. With the newly franchised branches starting opening their doors under the reign of the new managers with the support of the staff, I hope they can now leave all that turmoil behind them and ensure a new momentum where trust with both staff and customers is restored.”

This article part of a series of three that WPP and RetailDetail made based on the new WPP Brand Study 2023. A second part features the way in which our state of ‘permacrisis’ pushes Fearonomics onto retailers, and how they should respond. The third article portrays the (few) winners and (many) losers of the current price wars.

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