Delhaize Group: trends affecting global food retail

Revenue for the Delhaize Group grew to €21.4 billion last year, up about 3.7% on 2013. But operating profit for the Belgian international food retailer – present in seven countries […]
Tue 21/04/2015
Delhaize

Revenue for the Delhaize Group grew to €21.4 billion last year, up about 3.7% on 2013.

But operating profit for the Belgian international food retailer – present in seven countries on three continents – slipped from €537 million to €423 million and operating margin from 2.6% to 2.0%, it said in its annual report. At the end of 2014, the group’s sales network consisted of 3,402 stores and it employed about 150,000 people.

With $17.7 billion (€13.4 billion) in revenues and a network of 1,295 stores at the end of 2014, the US is its biggest market. Of total group revenues, 63% came from Food Lion and Hannaford, operating along the US east coast, from Maine to Georgia and covering 15 states.

In the report, Delhaize said it sees three main external competitive trends affecting the food retail industry today.

  • Large format stores, particularly hypermarkets are being challenged. Several large players are experiencing a slowdown of comparable store sales (CSS) in their core large formats. Thus they are developing smaller formats as well as on-line alternatives to try to revive growth.
  • The rise of the discounters has progressed unabated.
  • As the number of channels proliferates – discount, traditional, hypermarket, club, dollar, online – the blurring of boundaries between formats continues. Food retailers are joining other industries in developing, testing, and refining different business models to adapt to both new consumer demands as well as a changing competitive landscape. The result is that shoppers no longer distinguish between formats; they only want their favorite products at the best prices.

Goal: be known as the best in fresh

In addition, and because of these trends, margins in the retail sector are increasingly being squeezed. “Our response to these trends is to refine and update our formats and intensify our e-commerce efforts while continuing to invest in the customer proposition. Our goal is to be known as the best in fresh, with an efficient yet innovative assortment, delivering the best shopping experience at the best everyday value.,” Delhaize said

It also listed 3 other trends it sees impacting food retail:

  • Increasing consumer demand for transparency about its products, such as where they are from and how they are produced.
  • Health trends including the increase of diet-related diseases (obesity, diabetes, malnutrition) impacting customer health needs and expectations.
  • Increasing pressure on both agriculture and oceanic resources impacts price and availability of our products; such as the increasing global demand for food, decreasing availability of water, diminishing soil quality, and climate change impacts such as droughts and storms.

Source: http://annualreport.delhaizegroup.com/overview/key-figures/