There is still room for new supermarkets
Supermarket chains are doing well in Luxembourg. Most of them allow you to open new stores.
Trade
Supermarket chains are doing well in Luxembourg. Most of them allow you to open new stores.
In December, a chain of supermarkets opened two new stores. The offer in Luxembourg has thus widened again. As a consumer, you could almost imagine yourself in paradise. Due to the small size of the country, a 20-minute drive is usually enough to get to the nearest supermarket. But what about the density of supermarkets in Luxembourg? Are we not going to find ourselves in a situation where there are too many supermarkets in Luxembourg?
“With all my colleagues from other supermarket chains, we agree that the density of supermarket chains in Luxembourg is very high”, admits Laurent Schonckert, director of Cactus. However, he is optimistic about the future. Pierre-Alexandre Rocour, director of Aldi Luxembourg, agrees. Competition dominates business, but “we believe there is enough room for everyone in the market, as long as added value is created for the consumer”.
The Luxembourg Confederation of Commerce (clc) also believes that the future of supermarkets is quite good in Luxembourg. She doesn’t care if you consider the total number and origin of customers in supermarkets. “If you look at our figures – sales area per inhabitant – we are among the top three in Europe. We do not count cross-border commuters who take their courses in Luxembourg during the weekend. This leads us to say that we do not have a surplus of supermarkets at the moment”, explains Claude Bizjak, deputy director of the clc.
The cake is bigger today than 20 years ago
So is Luxembourg the land of unlimited dreams when it comes to supermarkets? This is not quite the case. Because there are good reasons for the increase in the number of supermarkets in recent years. “Today, the cake is bigger than 20 years ago and there are more actors”, explains Laurent Schonckert, from Cactus.
This results from several factors. First, the strong population growth. “In 2000, we had 436,000 inhabitants, in 2022, we will have 640,000, an increase of 50%! “says Laurent Schonckert. This development is confirmed by the General Directorate in charge of SMEs at the Ministry of the Economy for the past few years: the population and the sales area have increased at the same rate of 5% since 2019.
The demand today is where people live and work.
Continue, Laurent Schonckert, the number of cross-border workers – they make a second part of their purchases in Luxembourg – has also increased sharply over the past 20 years, reaching 210,000 today. “Thirdly, we have economic growth which is higher than the European average. As a result, purchasing power has increased significantly, ”he summarizes. The boss of Cactus also mentions all the new residential areas that have sprung up in recent years, for example, in Belval and the “Cloche d’or”. Or, to a lesser extent, in Merl, where the Luxlait factory used to be. “So the demand today is where people live and work.”
Claude Bizjak, deputy director of the trade confederation clc.
Photo: Steve Eastwood
Nobody disputes that there is a privilege between the relatively strong purchasing power in Luxembourg and success in trade. Claude Bizjak of the clc, however, warns against consumer reluctance. “I don’t want to say anything negative here, but it’s debatable whether customers are really spending their money.” He refers to the OECD’s confidence indices, which have collapsed somewhat: “There have been fluctuations in recent years and we are not really finding the level we knew before the pandemic”. So we have to see how the next two or three years will unfold, he added. “Economic and social uncertainty certainly does not have a positive effect on trade,” according to Bizjak.
The groups carry out implementation analyzes
But if the evolution of consumption is not predictable, according to what criteria do supermarket chains choose their locations? It’s not like before explains, Claude Bizjak. “30 years ago, large groups were looking for building space at a fair price. Then we decide to build, on virgin land, so to speak”. Today everything is different. “The groups decide on the basis of an analysis of the site, taking into account the catchment area, the influx of customers, the number of inhabitants and so on”.
This vision of things is confirmed by Laurent Schonckert of Cactus. He speaks of a very “selective” approach in choosing a site for a new settlement. “Our most recent project is in the east, in Roedt/Syr. Our openness there is now linked to the fact that there is less competition than in a city. In the Roedt region, a lot has been built in recent years and the purchasing power there is very high,” explains Laurent Schonckert.
The situation is similar at Lidl. “We don’t want to settle on every street corner. We look at where the customer is. We try to be present, to be as close as possible to the customer”, explains Julien Wathieu, spokesperson for the group in Luxembourg.
The analysis of the location also goes hand in hand with the attachment to the country. It has long been known that Cactus, as a chain of local supermarkets, has a particularly good relationship with producers in the country. But the so-called discounters are also straining in this direction as far as the offer is concerned. Thus, Lidl has been focusing more and more on local products for several years to meet the requirements of local customers. The same goes for Aldi, which speaks of an offer of more than 230 products of Luxembourg origin and met in advance its customer communication in Luxembourgish. Colruyt also attracts in its offer partly with Luxembourg products.
These are certainly long-term relationships and strategies that are established there.
The local offer is a sign that these supermarket groups increasingly believe in Luxembourg. “These are certainly long-term relationships and strategies that are put in place,” explains Claude Bizjak of the clc. According to him, the existing chains are “big boats” that also sail on foreign waters. “Especially for food products, you have to win the trust of customers first. When you go to a new supermarket, you lose at first because the order does not match your habits. Supermarkets and customers therefore need to get to know each other first,” says Bizjak.
Business must be commendable
In such long-term business relationships, it is of course also important that the account is good at the end of the day. None of the groups contacted by the Luxembourg must declined to provide information on its annual results. They nevertheless report rather positively on their activities in Luxembourg, and almost all are authorized to open new subsidiaries in the future. Their results in Luxembourg are “satisfactory”, they say at Lidl.
Nathalie Roisin, the spokeswoman for Colruyt, says the store in Luxembourg is commendable. We are “very satisfied” with the development of supermarkets in Luxembourg – it is in line with our expectations and those of the group. Aldi is doing well as general manager in Luxembourg, says its Pierre-Alexandre Rocour. Laurent Schonckert, director of Cactus, also speaks of a “good establishment of the group in good locations”, of “correct management” and of “know-how in the management of money”.
This vision of things is confirmed by Claude Bizjak, deputy director of the Confederation of Commerce: “We do not consider figures either. But we are very close to the players, in particular via the Flad federation (Luxembourg Food and Distribution Federation), where the major distributors are represented. No difficulty was reported to me in this way,” concluded Claude Bizjak.
This article was originally published on the website of Luxembourg must.
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