Opinion lowed at a distance by the UK. The options of getting more square metres due to new buildings is limited in the Netherlands, so takeovers are a logical way to continue growing. On the other hand, Jumbo is opening more Food Markets, so building new shops is a possibility.”
Dutch retail is also quite concentrated, does that play a part? “In the Netherlands, we have three parties with a large share in purchasing. In sales, it’s more fragmented. Although the Netherlands has a fair degree of concentration, the formula diversity is large. That’s also because Superunie has a market share of about 30 per cent. In Germany, the market is much more concentrated with Edeka, Rewe, Aldi, Lidl and Kaufland. In the UK, the top five has a market share of more than 80 per cent.” Lidl and Aldi are presenting themselves as service markets more and more, and less as hard discounters, how will this affect the supermarket landscape? “In recent years, Lidl gained much of the market share. Aldi lost market share and the question is whether they’ll recover, although quitting isn’t in their culture. Lidl is growing faster than Aldi is shrinking. Together, these discounters have a market share of around 17 per cent. In coming years, that could grow to 20 per cent.”
What is Lidl doing well, or where did Aldi miss the boat, to explain the different trends? “The biggest difference is that Lidl started refreshing and expanding their formula earlier. Aldi followed later. In Germany, that development is running parallel. There, Aldi Nord also fell behind compared to Lidl and Aldi Süd. Aldi Nord is also the Aldi we have in the Netherlands, so it’s not surprising we see the same trend as in the mother country. Aldi Nord has presented a new formula in Germany, and this was received very positively, by competitors as well. It appears as if Aldi has found the way up again.” Does the repositioning of Aldi and Lidl create space at the bottom of the market for a new hard discounter formula? “Technically, yes, but I think it’s mostly a theoretical vacuum that can’t easily be occupied. The number of places of business is limited, so that it’s difficult to realise scale. That’s needed to really make an impact on the market. Locally, regionally or provincially, room can be created for a new hard discounter, but I have doubts about its feasibility. These often include long projects before a new supermarket can be build, and existing chains naturally also follow these plans.” 110
AGF Primeur • Special Edition Fruit Logistica • 2018
“Additionally, Lidl is very strong with its image of low prices and good quality. Lidl scores high on both points, and that’s favourable. That’s thanks to its high turnover rate, but they’ve also got good buyers that can make high demands due to the volumes they’re buying. Lidl’s price image is very good. Consumers experience Lidl as cheap, even though the actual price difference is much less big. That image is solid as a rock, despite the additions of more luxury.” Supermarkets are also often labelled as parties putting pressure on the market by buying at the lowest prices. “You can’t put all supermarkets in the same box. That all buyers try to get the lowest prices is an oversimplification of the market. That’s just the free market system. It’s very annoying, but if more product is available than can be consumed by the market, a market dynamic is created. When operating on a commodity market, like fresh produce, this is common behaviour on the market. Of course exploitation and the like shouldn’t happen. That’s the ethical side of trade. On a market on which you’re not very distinctive, the free market system plays a large part.”
How can you create a distinctive character for your product in fresh produce? “That’s tricky, because it’s difficult to distinguish from which grower a bell pepper came from, for example. They look the same, and they taste the same. In that case, you can be distinctive by saying you’ll do large promotions for supermarkets, that you’ll supply 24-7, that you’ll never supply rotting product and that the lorry will always be on time, but if you’re operating on a price market, the value of this is relatively limited.” Could a brand make a difference? “Imagine you’re in a supermarket and there aren’t any Pink Lady apples, would you go to another supermarket? Or would you buy a different apple? I think the ‘branding potential’ isn’t very large in this category. It wasn’t successful in dairy either, despite the fact that only one large company was left over. Looking at, for example, Friesland Campina, which invested tonnes and they only really managed to build a brand with Mona. That’s because consumers can’t taste the difference between Campina and another brand of milk. You need a noticeable difference, and the claim you make has to be manageable over a period of time. With Eat Me from Nature’s Pride, the company responded to a very relevant theme within fresh produce, by offering ripened avocados and mangoes. The question then is if the claim is manageable, after all, how
often does it happen that consumers buy a product that isn’t completely ripe?”
SanLucar claims it only offers fruit at its best. That works until a consumer takes a bite of one of the products, and the claim turns out to be false. Maintaining such a claim is tricky in fresh produce due to fluctuations on the market and the large volume. The topic ‘branding’ has been relevant in the sector for years, but it doesn’t have an impressive track record. “
“It’s also important to stick to the rules of ‘branded goods.’ You have to be consistent in that. Someone who did that well is Rob Baan, because his cress won’t be found at the Dirk supermarkets. The product isn’t meant for that. I once asked at a garden centre what the buyer thought of a certain brand. The buyer handed me a leaflet of the discount competitor, which offered the brand. That’s why this garden centre no longer wanted this brand. It’s the hog cycle, something is profitable, so more is made of it which ends up in cost price competition, this is also a danger for fresh produce.” How do the fresh produce shelves of the future look? “We’ll see even more processed products. Convenience will go even further, and, for instance, the recipe boxes of Albert Heijn are a major success. The question is what growers can do with that, because the large cutting plants aren’t owned by grower cooperatives. You’re always affected the most when your in raw materials. Grower cooperatives could get added value from processing the products. There’s still room in fresh meals, the share of fresh products is smaller in these products, but the margins for the final products are much more interesting.”
Is the takeover of a cutting plant by HAK in June an example of this? “That’s an interesting question, because HAK was already active in the convenience segment, but they’re now headed towards fresh convenience. Tomorrow’s fresh is processed fresh. We’ll also be talking about this during the Fresh Congress on 21 November.” Will there be room for exotics, for example, in supermarkets? “I’ve seen careful signs for more renewing in the Netherlands than during the peak of the price wars. Supermarkets are looking for a new distinctive characteristic, and exotics are a part of that. However, staff and customer-friendliness are also potentially distinctive. For Dutch full service supermarkets, it’s their only right to exist.”