In Belgium there’s an unusual war going on between The Delhaize Group and Unilever. Delhaize, being one of the biggest chains of supermarkets in Belgium, refuses to take Unilever’s products into stock at the conditions Unilever provides to the supermarkets. Unilever reacted with buying ad-space in the Belgian newspapers to convince the consumers to switch to other supermarkets, where the Unilever products are still available. Banning Unilever from the shelves has a big impact on the shops because Unilever has a whole lot of leading brands under its umbrella. Brands that the Belgian consumers use on a daily basis: Axe/Lynx, Dove, Rexona, Cif, Sun, Lipton, Becel, Maïzena, Knorr, Bertolli, Calvé , Magnum, Solo, Omo, Sunlight and about 250 other brands. When the current stock runs out you won’t be able to find these products in the Delhaize supermarkets.
While the Belgian media is figuring out who is going to win this war, I think their asking the wrong questions. It’s not about who’s winning this war, it’s about who loses the least.
- Delhaize will lose customers because a lot of the consumers are loyal to the brands, especially when it’s about products you use every day to fulfill basic needs (hygiene, hunger, thirst, …) and we’re not talking about 1 brand but about +250 brands. People who have been eating Zwan sausages for many years want to keep eating Zwan sausages. For products like toothpaste, deodorant of laundry detergent you don’t switch easily when you’re satisfied. People who drink Lipton every day don’t feel like switching over to the Delhaize house brand. When it comes to products you use on a daily basis, you want to use a brand that you know, trust and that you’re satisfied of.
- Unilever will lose customers because some people are loyal to Delhaize, because of its good reputation of high quality and diversity. Or maybe they just shop at Delhaize because it’s closer than other stores. Delhaize offers other brands for all the products they’ve banned from the shelves and in the business of Fast Moving Consumer Goods people who aren’t loyal to the brands will take the chance to try another brand. Simply because it’s not a big risk, it’s not like your buying an expensive car that you hope to drive for 10 years. When you take the risk of switching brands and after you using it you notice that you don’t like it, you only lost a few coins and you can go back to the brand you were using before.
The last few years shopping at two different supermarkets every week has become common: people buy half a shopping cart at Delhaize or Carrefour and continue their spending at Colruyt, Lidl or Aldi supermarkets. I think this is going to become even more common if Delhaize continues to ban the +250 Unilever brands from their stores.
I’m quit curious on how this is going to evolve: which side is going to give in? Delhaize? Unilever? Neither?
I think it was a daring decision of Delhaize, whether it was a smart decision time will tell. One thing I’m sure of is that Unilever’s ads in the newspaper must have stung a bit. In these ads Unilever shows pictures of all their top products and brands and states that Delhaize shoppers can better switch over to other supermarkets if they want to keep buying their favorite brands.