After C1000, Edah, Super de Boer and Deen, another well-known supermarket will soon disappear from the Dutch streets: Coop from Velp in Gelderland. Founded in 1891. The chain merges with industry peer Plus and will henceforth also bear that name the companies made Monday known.
The merger will create a cooperative that will form the third largest supermarket chain in the Netherlands in terms of market share. Only Albert Heijn (35 percent) and Jumbo (21.5 percent) were larger than the 10 percent of the Plus-Coop combination at the end of 2020. Together, the chains have 582 stores and a turnover of more than 5 billion euros.
The two companies together employ approximately 40,000 people. Jobs will probably disappear as a result of the merger, says Coop director Fred Bosch. He does not rule out compulsory redundancies, but a decision has not yet been made. Top man of the new combination must become current Plus director Duncan Hoy. Supermarket veteran Harry Bruijniks, who was previously a member of the board of Albert Heijn and a supervisory director at Jumbo, will become chairman of the supervisory board.
Coop and Plus know each other well. Together with Dirk, they are the largest of the smaller supermarkets in the Netherlands. Moreover, they are both members of purchasing organization Superunie and will remain so, they indicated on Monday.
They are both cooperatives that mainly consist of independent entrepreneurs. They must agree to the proposed merger, as does the competition authority ACM. In the current scenario, a quarter of Plus will soon consist of its own branches, the rest will be franchise.
Albert Heijn and Jumbo are still a lot bigger
Plans for the merger of the companies arose last summer. The supermarkets did not want to tell how exactly the organizations came together, but it is not a coincidence that the merger comes around in corona time.
The interest in ordering groceries online and having them delivered at home has grown enormously. In addition, supermarkets are feeling competition from the speed cameras who promise to deliver groceries within ten to fifteen minutes.
Digitally, the battle for consumer favor has entered a new round. An important part of the increase in the market share of supermarket companies in the near future will come from the expansion of the online presence.
It is no coincidence that the supermarket merger comes around in corona time
As a result, scaling has become even more important. Albert Heijn and Jumbo also noticed this. They could barely keep up with online growth during the pandemic. They are therefore investing heavily in additional distribution centers and their digitization.
If you want to keep growing, you have to go along with it, says Dirk Mulder, retail sector analyst at ING. “There are three important developments going on. The shift to digital shopping, the distribution process: how do I get groceries to the customer as quickly as possible, and the increasing importance of sustainability. Going along with this requires millions of dollars of investment. If you want to be able to afford that, you have to work together.”
Also read: Deen stops, but ‘only the name changes on the facade’
One supermarket that did not want to compete was Deen. The family business did not want to invest tens of millions in the mechanization of distribution centers and in the online branch. Deen announced at the beginning of this year that it would sell eighty stores. 39 of these go to Albert Heijn, 22 to Vomar and 19 to DekaMarkt.
The merger of Plus and Coop should result in cost savings of approximately EUR 50 million for the companies. This can come from, among other things, the merging of functions at the new head office in Utrecht and through savings on advertising costs.
In addition, the merged company Plus will soon have 550 branches, about 30 fewer than now. In some places, the so-called customer areas of the supermarkets overlap, causing branches to be closed.
The companies will allow three years to convert the Coop stores to the Plus formula. They expect that this can be started at the beginning of 2022, after approval of the members and supervisor.