Discover the latest market trends and uncover sources of future market growth for the Grocery Retailers industry in Netherlands with research from Euromonitor’s team of in-country analysts.
Trends
Grocery retailers continued to experience modest growth in 2014, despite the recovery seen in the Dutch economy. This modest growth can partly be explained by the counterbalancing effects of the various different categories that exist in grocery retailers. Whilst categories such as supermarkets, hypermarkets and discounters continued to perform well, other categories such as forecourt retailers, convenience stores and traditional grocery retailers continued to suffer declines in sales as the shopping habits of consumers continued to change.
Discounters remains one of the most dynamic store-based retailing channels in the Netherlands, registering exceptional current value growth of 5% in 2015. Discounters which offer products at lower prices continued to benefit from the lingering effects of the economic recession in 2015 as consumers tended to seek value for money. The discounters operating in the country typically offer limited ranges of food items at very low prices as well as very limited ranges of non-food items.
The two main discounters chains operating in the Netherlands are Aldi and Lidl. Lidl is showing particularly strong growth in the Netherlands and it is currently focusing on changing its image by offering fresh produce and premium brands at low prices.
Despite the partial recovery seen in the Dutch economy towards the end of the review period, supermarkets, the largest channel in grocery retailers, continued to face pressure during the year, growing by a mere 1% in current value terms over the course of the year. Given that Dutch consumers are becoming increasingly cautious in their spending, with many choosing to visit different supermarkets to purchase specific products, this habit has benefitted discounters, largely at the expense of supermarkets. Despite discounters attracting large numbers of consumers, supermarkets have the added advantage of offering wider assortments of products.
Competitive landscape
Due to the limited availability of space in the Netherlands, hypermarkets is a relatively underdeveloped channel, with Albert Heijn and Jumbo Supermarkten the only players in the channel. Discounters continued to perform exceptionally well in 2015, generating 6% current value growth. Albert Heijn continued to increase the number of its AH XL outlets, whilst Jumbo opened another Jumbo Foodmarkt in Amsterdam, bringing the number of hypermarkets operated by the company in the Netherlands to three. Jumbo Foodmarkt outlets represent a completely different concept to Albert Heijn XL, focusing mainly on fresh food and resembling a traditional market with different areas featuring stalls where chiefs prepare Asian, Dutch or Italian ready meals.
Whilst internet retailing has penetrated non-grocery retailing, this has yet to occur in grocery retailing. Albert Heijn is the major player in the internet retailing of groceries in the Netherlands, with its Albert Heijn.nl website offering more than 30 collection points for online orders of groceries. Further reinforcing its competitive position, the recent acquisition of Bol.com by Albert Heijn’s parent company Royal Ahold means that the company is now particularly strong in the internet retailing of non-food items. Even though other smaller companies operating supermarkets and convenience stores in the Netherlands now have an online presence and also offer they customers the option to order groceries online, these operations remain relatively small in comparison with Albert Heijn.
Jumbo Supermarkten remains the major competitor to Albert Heijn and the company also started offering online grocery shopping to its customers towards the end of 2014. The company reinforced its online operations by opening up 100 collection points by summer 2015. The forecast period is set to reveal whether Jumbo’s online sales will be able to compete with AH.nl. Other chained supermarkets are also venturing into the online channel, including Plus and Hoogvliet, which also offer delivery options and collection points in selected neighbourhoods.
Grocery retailers is a retail channel dominated by domestic players and the success of international players is limited. Discounters is the only grocery retailers channel in which international players have successfully penetrated the Netherlands, with the Germany-based Lidl Nederland and Aldi Nederland dominating the channel. UK-based Marks & Spencer is also attempting to establish itself in the Netherlands with opening of outlets in both grocery retailers and non-grocery retailers. The company’s main emphasis is on offering high-quality products and this is not expected to threaten any of the established grocery retailers in the Netherlands during the forecast period.
Prospects
Grocery retailers is expected to generate modest growth over the forecast period due to a number of factors. First, the Dutch economy is showing steady improvement and consumer confidence and spending are also rising. Whilst the Dutch spent less on eating out during the recession, this is set to change during the forecast period, given that the country’s economy is improving, with the Dutch thus expected to spend more on consumer foodservice, to the detriment of grocery retailers.
A second factor leading to slower growth in grocery retailers during the forecast period is set to be the continued price wars which are occurring in the channel. In order to compete for the attention of consumers, supermarkets and hypermarkets have been reducing prices and offering substantial discounts. Given that the leading discounters Lidl and Aldi are expected to continue performing well during the forecast period, the expectation is that the country’s supermarkets will also need to keep their prices low in order to remain competitive.
Discounters is expected to continue on an upwards trend over the forecast with, with both Aldi and Lidl expected to expand the numbers of outlets they operate in the country and engage in consistent promotional activities. Although discounters is expected to perform well in the Netherlands over the forecast period, growth in the channel is expected to be much slower than it was during the review period, partly due to the increasingly intense competitive environment in the channel and ongoing price wars. In order to compete with supermarkets, Lidl and Aldi are also expected to increase their product ranges and offer more fresh produce.
Although not particularly popular, the internet retailing of grocery products is expected to begin taking shape in earnest in the Netherlands during the forecast period, with many of the supermarkets present in the Netherlands already offering online shopping for groceries. These services are, however, still limited and in many cases underdeveloped. For instance, Albert Heijn is the only supermarket chain present in the Netherlands with a fully developed online retailing channel and the supermarket has invested substantially in this aspect of its business, making it difficult for other supermarkets to compete effectively. Nevertheless, the recent entrance of Jumbo into the online retailing of groceries is set to present AH.nl with strong competition, boosting growth in the internet retailing of groceries in the Netherlands. Other supermarkets operating the country have identified the need to offer their customers a multi-channel shopping experience, although developing and online sales aspect to businesses might not prove profitable for them in the short term.
