Very carefully, Jumbo sees the first signs of recovery

For the second year in a row, supermarket chain Jumbo is losing ground to the competition. Although the Brabant family business sold 7.1 percent more in 2023 than the previous year, other chains grew even faster. The market share of the number two of total Dutch supermarket turnover has therefore fallen to “more than 21 percent”, Jumbo reported in its annual figures on Wednesday.

A year ago, Dutch consumers still bought 21.5 percent of their groceries from the chain, which was founded by the Van Eerd entrepreneurial family. At the peak, in 2021, this was even 21.7 percent for the entire year. These may seem like small steps backwards, but for a company like Jumbo they are sobering figures: in recent decades, the group has been ahead of competitors every year.

It comes as no surprise: in recent months, new CEO Ton van Veen has hinted several times that Jumbo (10.9 billion euros in turnover, 100,000 employees) would also struggle in 2023. “In all my years at Jumbo, I have never been as concerned about profit margins as I am now,” Van Veen said at a staff meeting in June. According to him, the company that was “used to winning” had found itself on the defensive.

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Yet 2023 was a better year than 2022, Van Veen said in a telephone explanation on Wednesday. That was “the darkest page in the company's history.” First there was the arrest of then CEO Frits van Eerd, who is suspected of involvement in money laundering. A few months later, the man who built the current Jumbo died: Karel van Eerd, Frits' father and chairman of the supervisory board.

As the new CEO, Van Veen was tasked with making Jumbo a “challenger” again. In June he presented his strategy, which was implemented step by step in the following months. In short: Jumbo had to become less complex again, all attention had to be focused on the customer and keeping groceries affordable. With everything that distracted from this, such as flash delivery and large-scale sponsorship of top sports, Jumbo decided to stop.

It takes time before those changes translate into hard figures, says Van Veen. “It's not like you just press a button and everything is done. The costs outweigh the benefits.” This makes 2023 a year with “two faces”: the figures of the first quarters tell a different story than those of the last few months.

“Over the course of the year we have started to see tentative signs of recovery,” says Van Veen. In the third quarter, initially only for 'qualitative' indicators, such as the rating given by customers and 'penetration' – the percentage of Dutch people who visit Jumbo stores. But since the fourth quarter, Van Veen has also seen it reflected in turnover, he says.

In the week before Christmas, Jumbo had a market share of almost 22 percent, according to the CEO. “We hadn't hit that figure for a while.” Still, Van Veen wants to “guard against too much optimism.” In the coming year it will be important to prove that these positive signals are not one-off windfalls. “We must continue to build on the path we have taken.”

Shoplifting is on the rise

Keeping groceries affordable is perhaps the main focus of this new course, especially now that the purchasing power of many households is under pressure after two years of high inflation. This means: being more economical – in terms of sponsorship, but also when purchasing products and in your own organization.

Last year, this already led to price reductions on a thousand products, Jumbo reports. In addition, the group partly absorbed the higher prices from suppliers itself, which was at the expense of its own margin. How high the profit was last year will only become apparent when the annual report is published in March. But the 2022 result, 80 million euros in profit, “we will certainly not achieve in 2023,” Van Veen said earlier in NRC.

The fact that, despite these efforts, Jumbo did not come out as the cheapest in a survey by the Consumers' Association last month is therefore a disappointment, the CEO acknowledges. Measured across more than 120 basic products, Jumbo was 1 percent cheaper than average, just like market leader Albert Heijn and Plus, the number three. For leaders Dirk and Vomar this was 8 and 6 percent less. “That stings us, this is not where we want to be.”

Next year, Jumbo wants to further reduce the prices of products, the company says. The recently concluded purchasing partnership with German market leader Edeka, French mid-market Système U and internet grocer Picnic will help with this, Van Veen thinks. From this year onwards, the alliance will provide Jumbo with important “economies of scale”, which the company wants to return to customers in the form of lower prices and investments in service and sustainability.

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In addition to purchasing and his own expenses, Van Veen sees another 'expense' that he would like to reduce in the near future: the damage that Jumbo suffers from shoplifting. This so-called 'grey loss' is a growing problem, he says. The chain lost about 1 percent of its turnover due to theft. “If you look at a few years ago, it was still half a percent or less.”

With a turnover of over 10 billion euros, this amounts to a loss of more than 100 million euros per year. “So more is stolen than profit is made,” Van Veen refers to the net result for 2022. Jumbo is therefore now investing in new resources to reduce theft. For example, the company is testing “more intensive camera surveillance”.

Another option is to reward good behavior, says Van Veen. For example, by raffling prizes among customers who pass the sample at self-checkouts, such as discounts or free products. Because ultimately, the customers who pay properly are now the victims. “Everyone now pays a part for theft, whether they want to or not.”

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