The Cost of Strikes at Albert Heijn’s Distribution Centers: Loss Estimates and Long-Term Effects

That’s what experts say to RTL Z.

Albert Heijn distribution centers have been on strike for more than a week and you see more and more pictures of empty shelves on social media. Shops in the northeast and southwest of the country are particularly affected.

Although there are also stores that hardly seem to have any problems, it is clear that the strikes are costing the company turnover and therefore profit.

The Albert Heijn stores differ in size and therefore also in turnover. Laurens Sloot, professor of retail entrepreneurship at the University of Groningen, nevertheless dares to make a rough estimate of the total loss of turnover due to the strikes.

30 million euros turnover

Albert Heijn has an annual turnover of about 17 billion euros in the Netherlands, which is about 350 million euros per week, he calculates. If 20 percent of your total turnover is affected and you miss 40 percent of that part, it will quickly cost you 30 million euros per week in turnover, Sloot estimates.

In addition, a large part of the costs will continue, because you must continue to pay the permanent employees in the store. “I wouldn’t be surprised if the strikes cost Albert Heijn 10 million euros a week,” he says.

Fernand de Boer, senior equity analyst at Degroof Petercam in Belgium, arrives at a comparable figure. He reckons with a weekly turnover for Albert Heijn of about 300 million euros. “If you miss 10 percent of that, that is 30 million euros a week. That roughly amounts to a net profit of 7.5 million euros.”

‘Loss can still add up’

The loss for Albert Heijn can even increase, thinks Sloot. According to him, this is the case if some fresh products, such as fruit or vegetables, that are supplied to supermarkets are sold less.

After all, some customers may think they will make a mistake, so they don’t go to Albert Heijn for a while, says Sloot. “Then if products are left over and pass their sell-by date, they become unsaleable.”

Long term

The strikes also cost money in the somewhat longer term, thinks De Boer. Consumers who find empty shelves at Albert Heijn can get everything from competitors such as Jumbo or Lidl. “It takes a while to get them back and some customers don’t come back at all.”

Dirk Mulder sector banker, who focuses on retail at ING, also fears that the battle with Albert Heijn will change the atmosphere for employees of the distribution centers, which may make them less flexible in the future.

Suppliers of fruit and vegetables, for example, who cannot sell their products at the distribution centers due to the strikes, could also recover this damage from Albert Heijn. That could increase the damage amount even further. Albert Heijn itself could not immediately indicate whether this is already happening and whether the suppliers in question will also receive compensation for their damage.

And if Albert Heijn franchisees do not receive products, they will try to recover the damage from the supermarket chain, thinks equity analyst De Boer. Albert Heijn could not immediately comment on this either.

Effect Ahold as a whole

The effect of the strikes on Ahold Delhaize as a whole is limited, expects Rini Emonds, business consultant at market research agency Circana. Last year, the group achieved a net profit of 2.5 billion euros on a total turnover of 87 billion euros. About 70 percent of this was achieved in the United States.