Laurus struggles as price war rages on

Related tags Retailing

The price war in the Dutch retail market continues to impact retail
businesses there, none more so than Laurus which is also trying to
revamp its business at the same time.

First half sales from the Edah, Konmar and Super De Boer fascias were down by 11.6 per cent at €1.7 billion, or by 7.7 per cent on a like-for-like basis, as the embattled group struggled to find its feet and stave off the competition at the same time. The disposal of a number of stores - including petrol stations and off licences - inevitably led to lower sales, but it was the 3.2 per cent drop in Dutch food prices over the last 12 months which caused the most damage.

The group, which is partially owned by the French retailer Casino, operates three distinct store formats each focusing on a different market segment (hypermarkets, supermarkets, convenience stores) and as a result has found it hard to develop sales at all three fascias at the same time.

In an attempt to streamline its business, the group has culled a number of back office and warehousing operations while at the same time giving a major face lift to its stores: Konmar stores have been redesigned and the price of 5,000 key products being slashed by 7 per cent while Super De Boer has improved the quality of its fresh food offer.

Edah, meanwhile, has rolled out more of its new Lekker & Laag stores, which have shown an average increase in sales of more than 10 per cent compared to standard Edah outlets. Just six stores currently operate under this low-price format, although the success of the new design means that a number of other Edah stores will be converted.

While juggling the three different formats has been a difficulty in the past, at least in terms of cost control, Laurus' management believes that the variety offered by its fascias - and their different trading styles - should allow the company to grow more effectively in the future. But the repositioning of each fascia into areas of real growth will take until at least 2007, the group said, and real growth will also require better management of costs and back office processes.

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