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Colruyt adjusts ‘red prices’ for the first time in 50 years

26 mei 2022

13:20

From now on, fewer red prices can be seen in the Colruyt stores. The chain will still lower its prices if the competition does, but no longer emphasizes this.

The red prices have been a household name at Colruyt for decades. If the customer stumbled upon a price displayed in red in the store, he knew that Colruyt had lowered its price. Because a competing supermarket may or may not first lower its price temporarily or because Colruyt gave a discount on its own initiative.

Colruyt is now changing that principle. The chain only displays red prices when it comes to a discount that it organizes itself. If the chain lowers the price in imitation of a competitor, it shows that reduced price in black, just like the regular prices.

Colruyt says that this is clearer for the consumer. “They can now see more clearly when we give an extra discount on top of the lowest price,” says spokesperson Eva Biltereyst.

bargain hunters

One consequence of the decision is that it is becoming less clear which prices Colruyt has lowered in response to the competition. This makes it more difficult in Colruyt stores to accidentally bump into prices that are temporarily lower due to a promotion at another chain.

Colruyt customers who only want to buy certain products if they have a discount, must therefore be familiar with the regular prices or keep an eye on the brochures of the other supermarkets. If not, they risk missing out on a temporarily exceptionally cheap product and having to buy it a few days or weeks later at the then prevailing ‘lowest price’.

In recent months we have noticed that our customers are paying more and more attention to the price.

Chris Van Wettere

Colruyt Director



Colruyt disagrees with that reading. ‘Bargain hunters are still confident that they will always pay the lowest price in their region with us,’ says Biltereyst. ‘We will continue to lower our prices when competitors do, but display that reduced price in black. The price only turns red when we give an extra discount on top of the lowest price. That is clearer for the customers.’

Colruyt is adjusting its price indications for the first time since it decided in 1973 to promise its customers the lowest price. This strategy has made the company the most popular supermarket chain in the country in recent decades. Due to its frugality and frugality, Colruyt also became the most profitable chain in the country and beyond.

But in recent months, the lowest price guarantee has put a lot of pressure on the share of the supermarket chain. Colruyt is unable to pass on the high inflation in its prices. That’s because competitors – in particular Albert Heijn – keep their prices relatively low despite cost increases.

More frugal consumer

At the same time, consumers are becoming more frugal. ‘In recent months we have noticed that our customers are paying more and more attention to the price. The current context has an impact on the wallets of our customers and Colruyt wants to pay attention to that’, says Colruyt director Chris Van Wettere in a press release in which Colruyt announces the change in its price tags.

It is striking that Colruyt points out the changing consumer behavior to the market three weeks before the company publishes its annual results.

Hans D’Haese

Beursanalist ING



The company indicates that people are more interested in discount promotions and are replacing more expensive products with cheaper ones. Customers buy fewer different products, which means that the till receipt is shorter, but the total amount appears to be about the same as before the war in Ukraine broke out and inflation was through the roof. ‘That is due to inflation, but also to volume purchases,’ says spokesman Hanne Poppe. Colruyt sometimes gives an extra discount when customers buy multiple pieces of the same product.

Striking timing

‘It is striking that Colruyt points out the changing consumer behavior to the market three weeks before it publishes its annual results,’ says ING stock analyst Hans D’Haese.

Investors are counting down increasingly pessimistically to June 14. Colruyt did in the past year two profit warnings and said it expected a “significantly lower profit” for the fiscal year ending in March. Analysts are also gradually expressing their fears for the current financial year. At the beginning of this week, the Barclays stock exchange published a critical report, which Colruyt put on the stock exchange to the lowest point in ten years.

The company is now trading 25 percent cheaper than its European peers, ING points out. While it was relatively more expensive than other supermarket chains for years due to its high profit margins. This trend is not out of the blue. In fiscal year 2020-2021, the operating profit margin (EBIT) was 5.3 percent – actually 5 percent because the company benefited from a one-time windfall† Ten years earlier, the margin was 6.2 percent.

‘Investors are increasingly concerned about Colruyt’s profit margins,’ says D’Haese. ‘The competition is very strong in our country. It was indicative that Ahold Delhaize explicitly stated that in its latest quarterly report† The market here is tougher than in the Netherlands or the Czech Republic. That raises questions about the future of Colruyt’s profit margins, with all the associated consequences for the share.’ In the past decade, Lidl and Albert Heijn in particular opened many additional stores in Belgium.

Due to the extra competition, red prices appeared more often in the Colruyt stores. That number will probably decrease, now that Colruyt indicates its red prices in black.

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