2023-10-01 09:00:58
Obtaining a location permit for new stores is becoming very complicated. For the president and CEO of Colruyt, the takeover of 57 Match and Smatch is a golden opportunity.
Since July, Jef Colruyt, who still chairs the board of directors of the Colruyt group, has handed over the daily management of the group to Stefan Goethaert. This trained engineer, who worked for 20 years at Prayon, in the food additives niche, had time to gain experience at the leading Belgian distributor, where he arrived almost 11 years ago.
The project of purchase of 57 Match and Smatch stores let go by the Louis Delhaize group, which has yet to receive approval from the Competition Authority, is the first milestone in his mandate as CEO. In a rather turbulent world of distribution, the CEO and the president of Colruyt advocate a narrowing of gaps in working conditions between different types of stores.
Mr. Goethaert is the first non-member CEO of the Colruyt family. A deliberate choice?
Jef Colruyt (JC): Yes. We chose the best candidate (laughs). A CEO who was a member of the family or not was not the most important thing. We could have recruited him from outside the company, there were candidates, but we preferred to choose someone who knows the specificity of Colruyt well.
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Mr. Goethaert, can we say that the resumption of the 57 Match and Smatch is your first major feat of arms?
Stefan Goethaert (SG): This type of operation is always the result of a teamwork. Today I am in the position of CEO of the group, but the study of the file goes back longer.
“The fact that Match and Smatch stores are mainly in Wallonia and Brussels is an additional advantage.”
Stefan Goethaert
CEO of Colruyt Group
Mr. Colruyt said a little over a year ago that Colruyt did not have a policy of taking over a competitor en bloc. What made you change your mind?
SG: We are not covering all of Match since there are also activities in France. But the resumption of Match and Smatch was a unique opportunity to accelerate our expansion strategy. We have studied the file carefully. This is the reason why we are not taking over the entire store network. This acquisition is 100% in line with our development strategy.
Why are the other 27 stores not taken over?
SG: We looked at their geographic location. In the case of stores not taken over, we considered that this would not be possible due to a question of proximity to the Colruyt group stores.
150
millions €
The investment required to redevelop 57 Match and Smatch is estimated between 100 and 150 million euros.
Matches are mainly located in Wallonia. Is that what convinced you to make an offer?
SG: This is clearly an asset, not only in Wallonia, but also in the Brussels Region. We were looking for locations for new stores, but in recent years, it has been more difficult to obtain permits. Resuming Match and Smatch allows us to move forward faster than expected. And the fact that these stores are mainly in Wallonia and Brussels, even if there are also some in Flanders, is an additional advantage.
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How will the integration go?
SG: Two stages are planned. We will start with a transfer of the stores taken over in a CoMarché brand, which will serve as an intermediate formula. Then, we will move them towards our different brands which we know are profitable.
What investment will the redevelopment of Match and Smatch require?
JC: We estimate the necessary investment between 100 and 150 million euros, or around 2.5 million per store. It’s a significant amount.
“It’s not the Delhaize group that will come knocking on our door to offer us stores.”
Jef Colruyt
President of Colruyt Group
Did the proceeds from the sale of Parkwind facilitate your initiative?
SG – These stores represented a unique opportunity. It’s true that the resources obtained through the sale of Parkwind helped. It’s better to self-finance for this kind of amount than going through the banks.
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Would you be willing to take advantage of other opportunities?
SG: The work to integrate the 57 stores will already be substantial. There is also our investment in France, with Degrenne Distribution, which roughly allows us to double our activities in this sector and supply nearly 3,000 stores. But at the same time, we must remain open to what is happening around us, while remaining realistic. Our means are not unlimited.
If Delhaize stores cannot find a buyer, could you offer to buy some?
SG: (A pause) If there are opportunities, why not? There may be independent contractors who will rather interested in working with the Colruyt group.
JC: These are all individual projects with freelancers. It’s not the Delhaize group that will come knocking on our door to offer us stores.
You sold Dreamland to Toychamp. Why keep 25% of the shares?
SG – Because we were convinced that we were not able to give Dreamland the future it deserves. We have found the right partner in Toychamp. But we want continue to invest in non-food. Hence our decision to keep a 25% stake which complements our other activities (Dreambaby, Bike Republic and the three textile chains Zeb, The Fashion Store and Point Carré, Editor’s note).
“We must reduce the number of joint committees and salary gaps, but also ensure that the system is fair for each of the players.”
Stefan Goethaert
CEO of Colruyt Group
What is your view on the extension of the franchise model?
SG: Within the group we have both models and believe in their coexistence. But it is necessary making integrated and franchised systems coexist in a correct manner. It therefore seems unrealistic to us to keep five joint commissions, without forgetting an opportunistic use of the current system by a few actors.
How can we make these abuses disappear? By legislating?
SG: Yes. There are a few possible avenues. Discussions are underway between social partners and sectoral federations. The government could also take initiatives to fix the system.
What do you recommend?
SG: Currently, the wage gap is too large. It can go up to 30% for the same work. Must therefore reduce the number of joint committees and salary gaps, but also ensure that the system is fair for each of the stakeholders.
What are the most important criteria in your eyes?
SG: The level of payroll, clearly. Another important aspect is the fact that we can create small companies from a large one to be able to use a more favorable joint committee. This kind of situation should disappear.
JC: The owner of five stores who creates five separate structures to benefit from the most favorable joint commission is not fair. But the law allows it. Politics must therefore intervene. On the other hand, if we review the general conditions in a maximalist way, the gap with France, the Netherlands and Germany will increase. And we will lose jobs in Belgium because people will go shopping abroad even more. Unions have a responsibility in this area. It’s up to them to see where we put the cursor.
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What share does e-commerce represent in your revenue? How is it evolving?
SG: E-commerce represents today 7% of our revenues at the retail level. It suffered a slight decline after the covid crisis. But we are investing a lot in it and will continue to do so.
“The advantage of owning land allows us to innovate.”
Stefan Goethaert
CEO of Colruyt Group
In what areas?
SG: We will continue to invest in Collect & Go, in store and at home. To bring products to customers, we offer two systems: the classic and that of “drivers”, customers shopping for neighbors. We currently have 3,000, which provide on average two deliveries every two weeks. We believe in this system put in place during the health crisis, and which we could extend.
Colruyt pays attention to its environmental impact and this translates into a marked presence in the agricultural world. Do you have a quantified objective in terms of land purchases?
SG: No. There is no specific objective. We own around 500 hectares. It’s a lot, but at the same time, there are quite a few farmers in Belgium who have larger farms. We believe in innovation, the sustainability of our activities. To be able to achieve them, there are several avenues, including the use of our own land. It is one solution among others. The advantage of holding land allows us to innovate. It is not always easy for a farmer to take initiatives and risks if he is not sure that behind all this he will have customers. This is our asset.
Agricultural organizations criticize the pressure exerted by large companies, including Colruyt, on the prices of agricultural land which would prevent young farmers from having access to it.
SG: We have been active in real estate for decades. We have developed expertise, and it is not not in our interest to drive up prices. In the more recent case of agricultural land, we also give opportunities to young farmers, for whom it is difficult to invest in new land, to have additional areas. We give them access to this land and enable them to increase their production, with the guarantee that we will do what is necessary to ensure that the results of their efforts are rewarded fairly.
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Do farmers maintain autonomy in their production?
SG: Yes. There are several models of collaboration in which the entrepreneurial spirit of farmers is always valued and consultation is favored. On the land we own, what matters to us is the quality and health of the soil. In Belgium, it is generally not good. The soils are depleted, which is not always easy for a farmer who depends on the results of his activities. We must therefore work in the long term on the health of the land.
“We are not targeting short-term investors.”
Jef Colruyt
President of Colruyt Group
One last question: is a stock market presence essential for a group like Colruyt?
JC: We are listed since 1977. Financially, we do not need the scholarship. Last year, I wasn’t very happy, with the stock price plummeting because no one believed in us anymore. In one year, we go from 22 to 41 euros. Who wins? Banks, which take their commissions on recommendations to sell or buy. We are rather long-term shareholders.
But the stock market favors the short term…
JC: Not necessarily. A large proportion of investors, funds or individuals make long-term investments. We are not targeting short-term investors.
Key phrases
“The resumption of Match and Smatch was a unique opportunity to accelerate our expansion strategy.””We believe between 100 and 150 million euros the investment necessary for the renewal of the 57 stores, or around 2.5 million per store.””It is necessary making integrated and franchised systems coexist in a correct manner.” “Financially, we don’t need the scholarship.”
CV express – Stefan Goethaert
Formation: Civil engineer (KULeuven)2000: Director of the Puurs de Prayon site2007: Responsible for activities for the United States and Canada2009: COO of Prayon in Engis2012: joins Colruyt2019: director of private labels (Boni, Everyday)Avril 2022: operational director of Colruyt GroupJuly 2023: CEO of Colruyt Group
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