Jumbo seeks buying power in alliance with Edeka

Dutch supermarket chain Jumbo has joined Everest, the buying combination set up by German market leader Edeka, seeking international buying power to offer customers lower prices.

Lower prices, better margins

The collaboration in both alliances will start immediately and will offer the retailer significant economies of scale as early as next year. The cooperation should “lead to a more equal purchasing position compared to international A-brand suppliers”, CEO Ton van Veen explains. After all, Jumbo is a relatively small player when seen on a European scale, with limited bargaining power against the big multinationals. That is now changing, which should translate into lower prices and better margins. “It will givesus room to invest further, not only in our range, but also in further sustainability, for example.”

Both Everest and Epic Partners were founded by German supermarket chain Edeka and are led by CEO Gianluigi Ferrari, who previously led retail alliance Agecore. Other Everest members are Dutch Picnic and French Système: including Jumbo, the combination achieves 100 billion euros in sales. It is said to be negotiating with 44 European brand manufacturers on uniform European net prices: in other words, it wants to do something about the infamous territorial supply constraints that cause large price differences for identical branded products in Europe.

In addition to Edeka, Epic Partners unites Migros (Switzerland), Biedronka (Poland), Jerónimo Martins (Portugal), ICA (Sweden), Esselunga (Italy) and Magnit (Russia). This alliance negotiates ‘on top’ terms with the big brand manufacturers and has already come under fire several times for alleged abuse of power.

It is quite remarkable that Jumbo did not join an international alliance until now. With a good ten billion in sales, the company is big in the Netherlands but very small in Europe, while having to compete with retail giants such as Ahold Delhaize, Aldi and Lidl.