Dutch supermarket chain Jumbo has decided to stop regional price differentials and also partly abandon its Every Day Low Price policy to focus more strongly on price promotions. With these interventions, the retailer hopes to improve its competitive position.
Interventions
“Jumbo is returning to basics, aiming to become ‘Jumbo as Jumbo is meant to be’ again”, CEO Ton van Veen announced when presenting the (disappointing) annual results. The supermarket chain is struggling in its Dutch home market, with already two consecutive years of market share loss, and is investing millions in a struggling Belgian expansion.
Several of the interventions are already known: the retailer is paying tighter attention to costs, takes creative measures to tackle the growing shoplifting problem, focuses on its Retail Media platform and has started purchasing through European retail alliances Epic Partners and Everest. The latter has already led to visible conflicts with brand suppliers. The pricing strategy is also shaken up: two concrete readjustments become visible.
Battle of perception
Until recently, Jumbo worked with five different price lines in the Netherlands, according to the strength of local competition in each region. As a result, customers in the north and southeast of the country sometimes paid a bit more than in the main Randstad region, for example. Recently, those price lines have gradually been brought to one level, the retailer confirms to Distrifood. That way, customers across the country immediately notice when the supermarket chain structurally lowers prices.
This week’s new folder for both the Netherlands and Belgium features more “Pay x, get one free” promotions, which is no coincidence. The chain has decided to move away from the Everyday Low Prices (or EDLP) strategy, and towards seeking attention with eye-catching offers. The supermarket chain had always guaranteed the lowest prices in the Netherlands as part of its “7 Certainties”, but it noticed that competitors had fared better with a focus on a “high-low” approach, with eye-catching weekly promotions.
As the market becomes increasingly promotion-driven – spurred on by rival Albert Heijn – the EDLP strategy becomes difficult to sustain: as a retailer, you lose the battle for the attention of shoppers, who become more sensitive to price incentives in times of inflation.
