Jumbo and HEMA, both Netherlands-based retailers, have said they have agreed in principle to cooperate commercially in Belgium and their home market. The retailers said they are still working on the terms of the cooperation.
Agreement aimed to improve their market positions
Announcing the cooperation Jumbo and HEMA said it was aimed at ‘further improving the market position of both companies’. They said this would be done by strengthening each other’s network and through Jumbo selling HEMA products through its stores. The companies said their offers were complimentary and, therefore, would work well together.
Cooperation with HEMA leads to cancellation of pilot with Albert Heijn
HEMA had previously discussed a pilot with Jumbo’s leading rival, Albert Heijn, which is owned by Ahold Delhaize. However, the pilot stores have not been opened and so the cooperation with Jumbo will mean that they never do. Albert Heijn’s spokesperson, Anoesjka Aspeslagh, said: “We knew that HEMA had decided not to conduct the pilot. The message about the collaboration with Jumbo is also a surprise for us.”
When announcing their deal, Albert Heijn and HEMA said the partnership would lead to ‘a further underlining of the development of convenience stores and food service in the centre locations of large cities to serve customers even better’. This insight is something that will clearly be benefit Jumbo, rather than Albert Heijn.
Cooperation to support Jumbo’s expansion plans…
According to the reports, Jumbo is looking to takeover some of the Hema stores following the cooperation agreement. Although this will take time, as Hema stores fall under different zoning laws as compared to a supermarket, and may not lead to the transfer of as many as Jumbo hopes for, the move will support its expansion plans in the short to medium term.
…Potentially most for Jumbo City concept
While Jumbo will be looking to expand wherever is possible, the collaboration could provide it with a renewed impetus for the expansion of its Jumbo City banner. The city centre locations that HEMA could provide would enable it to grow the footprint of its food-to-go led convenience format and help it compete with market leader’s Albert Heijn to Go format. When we visited the store (which subscribers can see here) in early 2019, we were impressed by how it is enhancing its small stores through the integration of best practice from its La Place and Foodmarkt businesses.
HEMA’s strategy becoming increasingly flexible as it expands presence
The collaboration between Jumbo and HEMA underlines the latter’s growing flexibility in terms of how it is approaching expansion. The collaboration between the two retailers also highlights a growing trend for retailer globally to align with other companies to help them both win with shoppers, rather than feeling they need to own the other company, as they might have done in the past.
Quicker expansion to raise competitive levels in Belgium and Netherlands
The collaboration with HEMA will help Jumbo expand in the Netherlands and potentially more quickly in Belgium, where it opened its first store recently. Jumbo’s acquisition of stores from Sligro, its takeover of Agrimarkt stores and the collaboration with HEMA will enable it to grow its store base in the country more quickly than if it were to build new stores. In both countries, Jumbo’s growing presence will add to the competitive environment, increasing the pressure on prices and margins and will encourage competitors to invest in their operations.