Dutch supermarket chain Jumbo is struggling in Belgium: the group has had to put another twenty million euros into the loss-making branch. Analysts wonder how long the Dutch retailer will keep up its Belgian plans.
Second aid package
This is already the second time shareholders have come to the rescue, Belgian newspaper De Tijd reports: in November 2021, the Belgian branch had already received 25 million euros in support. Last financial year, the chain suffered an operating loss of 5.5 million euros in Belgium, on a turnover of 108.5 million. Before the previous injection of capital, the division had a negative equity of 11 million.
The problem is one of scale: Jumbo ends the year with 27 shops in Belgium, far fewer than what the Dutch retailer had hoped for. The goal was to open fifteen shops in 2019 (the year in which Jumbo started its Belgian expansion) and to have a hundred Belgian supermarkets by 2024 – a target that is already delayed to 2027. This is not just a symbolic number but a necessity to achieve sufficient scale, as the recently resigned CEO Frits van Eerd explained earlier.
Nothing to gain
Although the existing stores are apparently performing quite well, the company is still struggling with the differences between Belgium and the Netherlands: Van Eerd admitted to not yet being able to read Belgians’ behaviour sufficiently and to regularly struggle with permits. Whether these are just teething problems or they turn out to be insurmountible, forcing Jumbo to relinquish its southern expansion, is still up for debate.
Indeed, Jorg Snoeck said that “if I can make a prediction for 2023, it would be that Jumbo will leave Belgium.” The RetailDetail founder points out that in order to get the needed scale, Jumbo will need to keep investing tens of millions of euros in the coming years, without knowing whether that will suffice. 2023 will be the year in which Jumbo makes the tough decision to keep fighting this bloody battle, or to cut its losses. “In the Netherlands, Jumbo has to defend its position as second biggest chain. They have a number of challenges on their home market, and it might be wiser to focus on that battle.”