Updated: Jun 15, 2021
Discount retail chain MERE (family owned by Schneider) has announced its arrival in Belgium and wants to challenge Aldi and Lidl there. Experts warn of the dangers of a price war that can be felt right down to the farmer.
The Russian price fighter MERE has plans to open ten more stores in Belgium this year. The chain announced this in May. According to a director of the chain in Belgium, Jean-Claude De Gheest, the chain wants to open its first store in Opwijk in September.
The Mere chain of stores is part of the Torgservis group and has a registered office in Siberia. In Russia, Belarus and Kazakhstan, the group is active under the brand name 'Svetofor' and has 2,200 stores, according to Russian sources. In 2017, the Svetofor group expanded its operating area to Eastern Europe and opened stores in Romania, Poland, Serbia, Greece, Latvia, Ukraine and Lithuania. Further it is also operating stores in Spain and UK.
Five German stores
Since 2019, the chain with the brand name MERE has also been present in Germany with five stores. During the opening three years ago, the public was lined up to get in. The Russian chain wants to compete with Lidl and Aldi in Belgium and says it is 20% cheaper than its German competitors. This low price would be achieved with a sober shop layout, with a limited range of up to 2,000 SKUs displayed on wooden pallets or in cardboard boxes.
Lower wages in Eastern Europe
In addition, De Gheest says that it can also stunt in terms of price by using foodstuffs of Russian or Eastern European origin. “It is easy to understand that prices are up to 20% lower than in the aforementioned department stores. Wages in the Eastern Bloc are much lower. The chicken we offer comes from a farmer from Ukraine who uses his maize field down to the last piece of land.”
By also offering products of Eastern European origin, MERE goes directly against the social trend of sustainability that has been gaining popularity in recent years and the growing need for products of local origin. “Many consumers are not interested in sustainability at all,” says Stefan Van Rompaey of the specialized retail website RetailDetail. “Sustainability is a luxury that many people cannot afford.”
The expert does see opportunities for a new low-cost fighter on the Belgian market. “Lidl and Aldi are moving to the middle segment anyway, with the result that space is freed up behind it.”
Largest supermarket density
Luc Ardies, general manager of BuurtSuper, the sector organization of supermarkets, in turn questions the feasibility and especially the added value of a new supermarket chain. “Belgium has the largest supermarket density in Europe and then more supermarkets need to be added? In addition, all these supermarket chains already have cheaper private labels.”
Ardies mainly fears the consequences of a price war that can accompany a launch. “You often see during an introduction that prices are stunted in order to gain market share. The result is that other supermarkets follow suit, creating a race to the bottom that mainly affects small supermarket companies. These are often franchisees who have to go along with the franchiser's policy.
At the checkout, MERE wants to make a difference. The company says it is 20% cheaper than Aldi and Lidl.
Price battle also felt for farmers
“This price war can then be felt throughout the entire chain, right down to the farmer. “This while there is a lot of talk about a better price for agricultural products. Farmers are already paid too little for the work they provide and the investments they put into it,” continues Ardies, who says he is in favor of the French model. “In 2019, the discount campaigns on fruit and vegetables were put to a halt. 1+1 free promotions may no longer be applied to fruit and vegetables in France.”
From three to five German stores
According to Van Rompaey, things will not go so smoothly. “Obviously, Aldi and Lidl may feel rushed and continue to stunt their prices, creating a domino effect that can indeed be felt down to the farmer's level. But I don't see that happening right away. Mere also announced its arrival in Germany with great fanfare a few years ago, where only five stores have been opened to date.”
Plans for France
According to French sources, MERE also wants to open three stores in France before the end of the year. Sites in the northwest near Calais and in the far southwest near Nice are being considered, but no decision has yet been taken. MERE also wants to be the cheapest supermarket there, with prices up to 20% lower than Lidl or Aldi.