Sometimes you have to search quite a bit in your supermarket for what you want. ‘Where is the pesto and do they also have vegetarian croquettes?’
That will be familiar to supermarkets. They also have to look for takeover candidates. You can also open your own stores to grow, but that is not going so fast. The biggest problem for supermarkets on the takeover path is that they have often found chains that they want, but they are either not for sale or they are not allowed to buy them from the competition authorities.
There is a simple reason that supermarket chains want to get bigger: economies of scale. The bigger you are, the cheaper you can buy and the more you can divide the costs of, for example, the head office or the distribution center among your stores.
Larger means that your costs per product are lower, so that you either make more profit, or you can lower the prices for customers, making them even more willing to shop with you.
Smaller chains are faced with costs for, among other things, automation of their distribution center and e-commerce. That was reason for Deen to throw in the towel and sell the stores.
Now a lot of money in cash
“Companies like Jumbo now have a lot of cash in hand, because supermarkets have been running well lately. That also means that owners of smaller chains can now cash in,” says Rini Emonds, who is involved in retail at research agency IRI. And the fewer chains that can be taken over, the higher the price, according to retail expert Paul Moers.
Jumbo and Plus in particular will want to buy other supermarket chains in the coming years, supermarket connoisseurs expect.
Albert Heijn is by far the largest in the Netherlands, with a market share of about 36 percent. It is difficult to grow through acquisitions, because consumers in certain places quickly have too little choice, which means that the Netherlands Authority for Consumers and Markets (ACM) will not easily agree to a takeover.
Regional chains are takeover prey
Jumbo and Plus are, apart from discounters Lidl and Aldi, the other two supermarket chains that are active throughout the Netherlands, but they are still a lot smaller than the Zaan chain. Jumbo had 21.5 percent of the market last year and Plus is at more than 10 percent after the merger with Coop.
There are also a number of regional chains in our country and they are all potential takeover prey, Moers thinks. What is interesting about many regional supermarkets is that they often have strong local positions.
Jumbo missed a battle in North Holland
On Monday, the takeover of the Noord-Holland supermarket chain Deen by Albert Heijn and the also Noord-Holland chains Dekamarkt and Vomar were approved by the competition authorities.
North Holland was precisely a region where Jumbo was originally from Brabant not so strong and they must have watched with grit as they missed the boat in North Holland, Moers suspects.
Vomar and Dekamarkt
“But how long will Vomar and Dekamarkt (which is also located in Gelderland in addition to North Holland) remain independent”, supermarket expert Erik Hemmes wonders.
According to him, the takeover of Deen stores (22 by Vomar and 19 by Dekamarkt) is a nice reinforcement, but he also expects them to be even more interesting takeover candidates.
It makes a difference for Plus that, just like Vomar and Dekamarkt, it also purchases via Superunie. Then you sit around the table with a beer more often, so there is a chance that a takeover is being discussed, says Moers.
Purchasing with Superunie
The owners of other regional chains, such as Boni (mainly active in Utrecht and the north of Gelderland), MCD and Boon’s Markt (mainly in South Holland and Utrecht) will also consider in the coming years whether they want to remain independent, whether they Join Plus/Coop or sell the stores, IRI consultant Emonds expects.
According to supermarket expert Moers, Nettorama (active with discounters in North Brabant) is a perfect fit for Dirk.
Hoogvliet (mainly active in South Holland and Utrecht) is also an interesting player, he thinks. But Hoogvliet has a construction that prevents it from being taken over, says Emonds. Hemmes wonders what happens when the current great man Leen Hoogvliet dies.
‘Preferably in North and South Holland’
Nettorama and Hoogvliet also purchase through Superunie, as do Poiesz, which is mainly located in Friesland and furthermore in Groningen and Drenthe, and Jan Linders (mainly active in Limburg and the east of North Brabant). They are certainly also a takeover prey, sees Emonds.
Nevertheless, he thinks that retail chains in North and South Holland are more interesting, because the stores there are often larger and the turnover per store is therefore also higher.
Plus mainly works with independent retailers, but according to Emonds that does not have to be an obstacle to buying branches (which are of the supermarket chain itself) from other players. Coop, which has merged with Plus, also has a number of branches. In the first few years, Plus and Coop will mainly be busy converting Coop stores to Plus, Emonds thinks.
Plus can also grow by buying Sligro’s 45 percent stake in Spar, Hemmes thinks. Plus already has 45 percent and the remaining 10 percent is with independent retailers.
A retail chain does not necessarily have to be bought by one other competitor, the stores can also be distributed by multiple players, as was the case with Deen, according to Moers.
Are families ready for sale?
Ultimately, families must also want to sell and that partly depends on whether there are successors within the family, or whether the current top can continue for a while.
Furthermore, families often also own part of the real estate, which also generates income. That requires much less attention and the question is what they prefer, Hemmes concludes.