A price promotion being offered in the Belgian Albert Heijn supermarkets has sparked a wave of criticism and complaint, as competitors and authorities see it as the outbreak of a price war that risks being as serious as the one that took place in the supermarket’s Dutch homeland.
Albert Heijn (AH), a subsidiary of Ahold, which also owns the Delhaize supermarket chain, is offering a three for the price of one offer on selected lines, including breakfast pastries, pistolets, iced coffee, Soubry spaghetti, McCain oven chips, canned tomatoes, cereal bars and some bottles of wine. The “buy two, get one free” type offer is common. Buy one and get two free is unprecedented in Belgium.
The promotion has attracted the attention of federal consumer affairs minister Kris Peeters, who has ordered an investigation into possible dumping – selling products at a loss in order to gain publicity and win market share – which is illegal in Belgium. The danger is that large concerns like Ahold have the resources to take a loss while forcing smaller companies out of the market.
But according to Stefaan Van Rompuy of the consultancy RetailDetail, the promotion may not be as loss-making at it appears. The companies whose products are involved pay to appear in the publicity materials that promote the offer, thus offsetting some of AH’s losses. The offer also covers a small number of products, some of which may be sold normally at a high mark-up. Finally, AH Belgium is able to source many products at low prices from AH in the Netherlands, where dumping is not illegal.
Still, organisations representing other retailers have joined in the chorus of condemnation. Colruyt, whose promise is to match the lowest price for the same product, said it would follow AH on the lines affected, but only in their stores in proximity to AH – which currently only operates in Flanders.
Unizo, the organisation that represents the self-employed, joined with its subsidiary Buurtsuper, which brings together operators of independent supermarkets, to call on the inspectors of the economy ministry – under Peeters’ authority – to investigate the promotion.
AH was involved in a long-running price war in the Netherlands in recent years, which indeed saw the disappearance of many independent supermarkets and local shops, faced with cut-throat price competition from giants with deep pockets. Now that a large sector of the competition has vanished (or been transformed into franchises owned by the giants) prices have once more stabilised, and customers now have less choice, as well as fewer bargains.