Do Belgian retailers have any chance of survival?

Belgium pushed to the side?

The digital revolution is shaking up the retail sector in such a way that we can really talk about a “Switch or Die”
scenario: those who are not able to quickly and fully adapt to the new, digitalized
retail reality, will not only be squashed by the pressure of online ‘pure
players’ like Amazon and Zalando, but also by the retailers who have managed to
create an omni-channel strategy in time.

It is not a coincidence that Albert Heijn is moving towards an omni-channel
company, now that its offline results are dropping. The distributor
considers the Belgian market to be very enticing in this sense, but that means yet
another foreign party is invading the Belgian retail market, while Belgian retailers are increasingly
being pushed to the side.

Wage handicaps and other issues

Belgian trade federation Comeos fears the worst, even for
those who (are able to) go digital: according to their own figures, 37 % of online
turnover is flowing away to foreign traders – a figure that might almost double to 68 % by 2018. The fact that we lose (online) turnover to foreign traders, has several
reasons: the
Belgian wage handicap is a classic argument, as labour costs are sometimes up to 20 %
higher compared to some neighbouring countries.

Another important issue, especially for e-commerce, is how companies from
larger markets profit their advantage in scale. Countries with larger neighbours with the same language (like Belgium, Ireland,
Austria or Cyprus) can easily be “conquered” by their bigger counterparts, who even do not have to translate their website in order to invade the smaller market.

Offline retailers may not be under this particular pressure, but they have
to deal with changed consumer preferences. Companies that want to survive, simply HAVE to go for online. A well-conceived
omni-channel strategy may cost a lot of money, but the alternative (not going
for omni-channel) is just unthinkable. 

Matter of survival

Restructuring a company remains a
painful necessity: Makro has to cut costs and let go 374 people,
which everyone just has to accept as a necessary step towards survival. However, that is not enough: the chain also has to work on its
commercial offer towards the consumer, because a reorganization alone will not
suffice to create a new impetus. 

If we want to avoid another “Free Record story”, then we have to allow retailers to arm themselves in this Amazon-Zalando
world of new business models. Some say it is already too late, as
local costs are so high that they eliminate any competitive edge Belgian retailers
may have. But is that really true, are Belgian retailers unable to compete?

Purchase power preserved

There are always two sides to a story and that is also true for the Belgian
situation. The heavy burden we have to shoulder, apparently helped us pass this
crisis relatively unscathed, according to research at the University of
Antwerp. Consumer trust and (more
importantly) the economy did not drop as sharply as in other countries,
thanks to our social welfare state.

EU statistics point out that Belgium has
been the third largest grower in the last five years, exactly because we were able to strike a balance between economic growth and purchase
power. That is why the Belgian retail has managed to stay clear of the huge turnover drops that plagued (amongst others) the Dutch DIY sector with enormous declines.

Collaboration is essential

While the European Commission had expected a 0.4 % drop of local consumption (and OECD
even predicted -0.7 %), we are going to limit the damage to a 0.3 % drop according to calculation of Belgium’s central bank. Our Dutch neighbours are significantly worse off, as a number of
sectors are really suffering because of the lowered purchase power of the
consumer.

Everyone (retailers, employees, unions and the government) have to realize
that we are facing a challenging period. Looking for a scapegoat is just a waste
of time: only if we all work towards a single goal, we
can turn our country into a competitive, prosperous market – tuned into the mobile age.

We should look up to retailers that
have made the best of the situation; those creative and innovative
retailers, which have pushed our country and the sector forward. Like the top-notch retailers at the RetailDetail Omnichannel
Congress, they (have) realize(d) fully well that collaboration and not conflict is essential to switch to an omni-channel society.

(Translated by Gary Peeters)