Ken Research announced its latest publication on, “Food and Grocery Retailing in Belgium-Market Summary & Forecasts; Comprehensive overview of the market, consumer, and competitive context, with retail sales value and forecasts to 2020”, offer insights on the changing trends and key issues within the Food & Grocery Retail Market in Belgium.The publication includes an insightful analysis of changing consumer behavior, changing economic and demographic factors, technology innovations, leading domestic and international players, distribution channels and regulatory framework within which theFood & Grocery Retail Market in Belgiumoperates. The analysis of the aforementioned trends for major Food & Grocery categories: drinks, household products, packaged food, tobacco and unpackaged food; for their sales through leading distribution channels such as Convenience Stores, Food and drinks specialists, Hypermarkets, supermarkets and hard-discounters, Value, variety stores and general merchandise retailers, General retailers, Specialist retailers, Value retailers, Online; has been done from 2010 to 2020.
Economic Environment of Belgium
Belgium is a federal state with three culturally distinct regions: Flanders, Wallonia, and Brussels; with substantial economic power allotted to each of the regions. It is one of the highly industrialized countries in Europe. Except Luxembourg and Ireland, its economy is one of the most open economies of the world having strong integration with its three main neighbour countries: Germany, France, and the Netherlands. Brussels serving as headquarter of NATO & EU; makes Belgium a prominent member of EU, and also of OECD and WTO; thereby compensating the small size of the country by its substantial global position. After having contracted, currently, Belgium’s economy is recovering reaching 1.3% GDP growth rate both in 2014 and 2015 on account of increased exports and investments in Belgium.
Looking at the macroeconomic scenario of the country, Belgium is home to 11.2 million people. With USD 458.6 billion, Belgium’s economy globally ranks twenty-third as per nominal GDP and with USD 43,629, the global rank is seventeenth as per GDP per capita. The sector wise contribution to GDP includes approximately 73% from its strong & huge service sector employing most of its skilled workforce, followed by industry (25%) and agriculture (2%). Being poor in natural resources, imports are basically dominated by raw materials and processed for exports. Exports are dominated by electrical equipment, vehicles, diamonds, and chemicals and contribute to 80% of the GDP. The country provides for an open economy with low barriers to overall foreign trade and investment. Three-fourth of Belgium’s foreign trade is with other EU countries. Foreign investment in the country amounts to USD 4956.7 million. With low average unemployment and improving inflationary conditions, the business environment has become attractive for market players. However, red tapism as a disincentive to foreign investment, high public debt, uneven economic recovery along with structural weaknesses such as rigid labour market and high taxation, holds back the economy from growing at its full potential.
Brief Overview of the Food & Grocery Retail Market in Belgium
With improving macroeconomic environment all over the world, the global Retail Market has emerged as fastest growing market with consistent growth both in volume and value terms and increasing contribution to the nation’s GDP. Unfortunately, Retail Market in Belgium has been witnessing slowdown for a few years, on account low inflation and low GDP growth, adversely affecting the retail market. However, with increasing exports and investment in the country, economic recovery has started, implying positive growth outlook for the retail market.
Looking within the retail market in Belgium, Food & Grocery category dominates the market as the fastest growing and largest category, as per retail sales. With a value of EUR41.8 billion in 2015, the category accounts for 59.8% of total retail sales. With recovering economy and rising disposable income, per capita expenditure on Food & Grocery has been increasing with its value at EUR 3,729.9 in 2015. Looking at strategic trends from supplier side, there has been growing number of smaller formats and cheaper product offerings from the major retailers. Competitiveness in Belgium’s Food & grocery market is very low, with more than 70% of the market share being captured by top three retailers in the market. There is prevalence of low price strategy so as to achieve maximum market penetration. Also, as far as various distribution channels are considered, convenience stores are the most popular, accounting for 40.9% of sales in 2015. One most recent and popular trend in the market is the evolution and expansion of online retail channel on account of increasing internet and mobile penetration in the society. Overall, Belgium’s steadily recovering economy indicates gradual improvement in retail spending along with vast growth opportunities for retailers.
Major Players in Belgium’s Food & Grocery Retail Market
Looking at the competitive landscape, the Food & grocery retail market in Belgium is characterised by very low level of competition. More than 70% of the market share is captured by just three major companies. Some of the major market players are: Carrefour, Delhaize Group, Colruyt, Lidl, SPAR, Aldi, Louis Delhaize Group, Intermarche and Albert Heijn.
Carrefour, Delhaize Group & Colruyt are the top three market players, together controlling the largest market share. With only few market players having more or less the same production capacity, retailers are forced to look for other options to attract customers and achieve high market penetration. As a result, smaller & cheaper product offerings are trending in the market along with intense price war among retailers.
Belgium’s Food & Grocery Retail Market Prospects
Despite slowdown in Belgium’s retail market due to recession over the review period (2010-2015), steadily improving economy with rising disposable income & falling unemployment, over the last two years, paints a positive market future with positive growth rates over the forecast period (2015-2020). With rising disposable income, household consumption and hence retail spending is expected to remain positive and increasing over the coming years. As a result, food and grocery retail market is forecasted to grow posting CAGR of 1.89% over 2015-2020, reaching value of EUR45.9 billion by 2020. Per capita expenditure on Food & Grocery is also expected to increase to EUR 4,012.9 by 2020. With increasing number of smaller apartments and one parent families, along with convenience trend among retailers, convenience stores will continue to dominate among the distribution channels while online channels will see growing sales at a CAGR of 10.37% during 2015-2020.
Some key driving factors for Belgium’s Food & Grocery over the forecast period includes:
• Smaller & Cheaper product offerings by major retailers
• Steadily growing economy with rising disposable income& lower unemployment rates
• Constant savings rate implying consistency in retail consumption
• Improving labour market& inflationary conditions in the country
• Balanced demography and social rise in the economy
• Increasing inbound tourists offering growth opportunities in retail sector
However, since the retail market in Belgium is already mature; this may tend to limit the growth potential of the Food & Grocery market in coming years. Additionally price competition may also restrain the growth.