Domestic operations and their profitability are central concerns for Delhaize despite its ambitions in the United States, as Renaud Cogels, general manager of Delhaize Belgium, tells Gillian Law Delhaize has become an enormous player in the US retail market. Although the company now operates in 11 countries, Delhaize America is far and away the largest part of the business, and growing, albeit in the face of the unrelenting march of Wal-Mart (see page 32). However, Renaud Cogels, general manager of Delhaize Belgium, says the Belgian market is still the home of the company and he certainly doesn't feel sidelined by its bigger offspring ­ just "conscious that a very small investment in 1974, when we bought 17 supermarkets in North Carolina, has turned into the biggest part of our business" and so, he says, the company is aware such fast growth can be replicated elsewhere. The Belgian operation is still growing, with 38 stores opened in 1999 and a further 56 planned for this year. It accounted for 19.5% of the group's total turnover in 1999 and holds a 23.5% share of the Belgian market. Overall, the Belgian market doesn't differ much from the rest of Europe, says Cogels, apart from the UK which is out on its own in terms of retailer quality. "I have always been impressed by the operations of the British retailers, who were the best in the world and probably still are. Even with the problems [facing] Sainsbury and Marks and Spencer, let's look at this with clear eyes: they have made a lot of money and used that money to do very intelligent things." UK standards in quality and service are better than anything in Europe, he says. "The UK has always been our model." Delhaize Belgium imports much of its product range, particularly in the chilled ready meals area, from Britain because it cannot find similar quality on the continent. "Believe me, when we started with ready meals we looked around and started working with both French and British companies. We don't deal with the French ones any more." He works closely with Food from Britain and has found some very good suppliers, he says. "The British produce food with the right shelf life, they have chefs to oversee what they are doing, and they produce the food in big kitchens rather than factories. We even bring in Quiche Lorraine from Britain," he laughs. More lessons can be learnt from Hannaford, the supermarket chain recently bought by Delhaize in New England, and "in my opinion one of the best companies in the States, highly competitive, high quality and with good people. There will be a lot of ideas exchanged between Hannaford and Belgium because the cultures are quite close, in the products we sell and the market in general." A food business in Belgium has its advantages, he says, in that you are at the centre of Europe, open to products from all over the world. The fact that Brussels is the capital of Europe brings people to Belgium from round the world, and ideas are naturally exchanged. "We have a very good traditional cuisine ourselves, too, and a high interest in food." Delaize Belgium's success is also due to its mixture of Delhaize-owned and independent stores, says Cogels. Independent retailers operating under the Delhaize symbol fascia account for around a quarter of the company's turnover, he says, and have been a vital part of the business. "From the beginning, we have had a lot of independent stores. After the second world war, the number dropped: many of the independents were shut down and we started building our own supermarkets. The independent side was a little bit forgotten. But then in the 70s we started looking back at [the sector] and it's grown slowly since then." While there are other symbol chains fighting for the independent Belgian business, Cogels says Delhaize is well recognised and several stores switched to Delhaize last year. "We give them profitability, the margins are good and there's a unique products range too. The product range is very important to them." The product range they need is sometimes a surprise, he says. "I had lunch today with some independents and we talked about what they need ­ and they were talking about the organic products we have and how they have to sell them, how they have customers who want them, and so we are happy to help them." Delhaize has a range of 300 own label products which the independents are also allowed to sell. "In fact, the independents tend to stock even more private label than our own stores. They like it, it helps them to compete with their competitors." Delhaize has also set up Caddy-home, a home delivery grocery service. This was originally a telephone-ordering home delivery system and has now moved on to the internet. It's not big yet, says Cogels, and still has problems on the delivery side but it is at least equivalent to one large supermarket's turnover. Two central picking depots, one in Brussels and one in Antwerp, keep costs down. The dioxin scare in May 1999 was a disaster for the whole Belgian food industry, says Cogels, but Delhaize was able to trade on its reputation for quality and supply what food it knew to be safe. Affected products were withdrawn immediately and the company set up an information campaign to keep customers informed. The Coca-Cola product withdrawal which followed soon after shook the industry still further. "It's not been the best year, but it probably forced us to rethink our products and our positioning. There's a good side to everything," says Cogels. Delhaize Belgium has a very successful loyalty card scheme now being extended to include other retailers. "More than 90% of the value going through our stores is from customers using a loyalty card. I've never seen figures like that, ever." Cogels puts the success down to the broad nature of the card, which allows customers to collect points on their Delhaize store shopping, petrol purchases from Q8 stores, clothing from C&A and other retailers are being brought on board. They can then exchange those points for cash or put them towards cheaper shopping. But while Cogels is happy to send general information and offers to customers on the card scheme, he is wary of using the shopping data collected. "We've been thinking about how to do it, how to use that information. Privacy is very important and I don't want to play with that just because we have the data. You don't know the reasons for their choices." A customer who doesn't buy milk, for example, may be buying it elsewhere, but then again might have an allergy or not buy it for religious reasons. "I have one big fear. If I see a customer is buying Pampers, I might think she is a mother, and I will do a promotion for her'. So I send coupons ­ and it goes to a house where the baby later died. I think about that example a lot and will do everything I can to avoid that situation. It's still very impersonal, what you do with these things." Instead, he says, Delhaize would prefer to look at data about how often people shop, understand why, and work out ways to help them. Delhaize restructured its operations at the beginning of 1999 and now has four geographical divisions: the United States, Benelux, Europe excluding Benelux, and Asia. It's made the company more efficient, according to Cogels, and faster at implementing new ways of doing things. In particular, it has improved Delhaize's "geomerchandising" as it calls tailored geographic merchandising, "and we are not at the end of the reorganisations yet," says Cogels. "There will be further steps in the coming months and years. We are a big company and there are some areas that are going too slowly, where decision making is not as clear as it should be. So now we're going to make it better. Cogels' future plans are to make Delhaize Belgium more profitable, improve quality, and move "closer to the customer" with smaller stores. Profitability is a major issue for the Belgian operation, says Cogels. With the rest of the company growing so fast and doing so well, "there has been a little bit of complacency". He intends to improve the margins in the business by increased efficiency, aiming to bring Delhaize's level of profitability closer to other European retailers. Delhaize has joined the WorldWide Retail Exchange, one in the recent proliferation of net trading exchanges. "I have to admit we're not doing anything very active about it yet," says Cogels, "but we do hope to make savings on procurement. I won't say what it will or won't be for us, because we don't know yet." Delhaize is not Belgium's largest retailer, says Cogels, and he has no ambitions to make it so. "We don't try to be the biggest, we try to be the best. We like to know that some customers still don't really know us. That way there's still potential to tempt them over." - Delhaize America, see page 32 {{COVER FEATURE }}