Netherlands: this is why the Action is so cheap

Investigative journalist Rens Lieman worked in the midst of mostly Polish colleagues for four weeks in discount variety retail chain Action's (owned by PE investor 3igroup) hyper-efficiently organized distribution center. How hard does one have to work here to keep the prices in the stores so low?


“Am I in the Matrix now?” I ask the colleague who is training me after talking to a computer program for twenty-five minutes so that it gets used to my pronunciation? Just kidding, but one that I keep thinking about as I gain more experience as an 'order picker' in Action's distribution center in Zwaagdijk-East. The ins and outs in this warehouse resemble a computer simulation in which every movement, every action, is preprogrammed.


Like ants through an ant city, a few hundred order pickers on electric trucks drive through the long corridors of the distribution center. They drive purposefully and in straight lines. Four open-sided roll containers ride with them on the rear fork of the truck.


The mostly young Polish drivers wear comfortable clothing with yellow safety vests over them and have headsets on their heads. They talk into the microphone to the computer, which gives them commands and wants verbal confirmations after each action.


We are Action's first distribution center. A large, white box of blocks at a business park in Zwaagdijk-East. Not to be missed if you drive on the Westfrisiaweg that connects Hoorn with Enkhuizen (the Netherlands). The warehouse space has quadrupled in twenty years to more than one hundred thousand square meters, a good fourteen football fields. Action also has distribution centers in Limburg, France, Germany and Poland. 1200 employees work in this in Zwaagdijk-East, 700 of whom are temporary workers.


The customer does not have to pay one euro for a quarter of all products that Action sells. This efficiently and cheaply organized distribution center is one of the links that makes this possible. How are things inside? How hard does the work have to be, and who will do the work?


To find out, I applied for an order picking vacancy. I was able to start last fall. I would work at Action for four weeks, three days a week, from six in the morning until three in the afternoon.


Productivity all that matters

Order pickers are standing on their truck. For every box we have to 'pick up', we hop off and on again. In between we do sprints of a few meters. The trucks make a high-pitched whirring sound. We zigzag through the corridors.


In this way we collect the products that the 395 Dutch Action branches have ordered. Until the four roll containers are full. Then we have to seal them, label them and have them ready at the truck docks, where another team rolls them into the truck. Repeat.


This is how it goes every day, eighteen hours in a row, in two different shifts.


“The work is simple, but top sport,” my foreman said during my application. A friendly West Frisian with straightforward communication. He explains that Action considers three things important: safety, quality and productivity. But actually it is mainly about productivity, he admits.


The safety protocols are taught to me in my first week. As a reminder, there is a mirror next to the staff lockers with the words: 'Who is responsible for safe working conditions in the warehouse here?' Another one next to it, with the same text, but in Polish.


Quality in Action's distribution center mainly means that you don't put chip boxes at the bottom of the stack. And that you do not pick up more than one wrong box per two hundred boxes.


Productivity is left as the one and only performance indicator. Work fast. Carry a lot of boxes. Forklift drivers and order pickers have a 'target', as is usual in distribution centers. A minimum requirement, you could call it better. Order pickers have to collect and prepare an average of 130 boxes every hour.


Quick talk

Every now and then I miss a no-driving sign, or I forget to keep room in my container for a thirty-litre trash can (€24.95). But in general it's fine.


I work hard, and because the computer has orders for me non-stop, the workday never feels too long. Exactly the same as the one before. When I squat by the lockers to exchange my work shoes for sneakers, my body feels pleasantly tired, as if I've been working out.


I start to recognize colleagues, sometimes strike up a conversation with them when our paths cross in the aisles. Quick talk, because we all have to reach our target. The Dutch-speaking colleagues I speak to do this work because they can't find another job for a while, or because this work simply suits them. The latter group previously worked in the Deen or Lidl distribution center nearby. The work is basically the same everywhere, they tell me. Targets, trucks, voting computers. What makes Action different are the many Polish colleagues in the workplace.


Is it nice to work here, I ask one of my colleagues while we prepare containers for the trucks? He shrugs. “Well, as long as you meet your target, they leave you alone and the work is okay. Straightforward."


The Poles work longer

The vast majority of my colleagues are Polish temporary workers. They work under Polish foremen and team leaders, have Polish contacts at the employment agency. Actions work instructions, forms and computer systems are all also available in Polish.


Poles like to work here because they can earn more in the Netherlands than in their home country. Action, in turn, is happy to hire them. According to Action, there are not enough people from their own region who want to do this work under the conditions offered. The Poles work hard - although not always neatly, but that is of secondary importance - and do not complain. Because they are hired through employment agencies, they can be deployed flexibly.


Action already needs that flexibility in normal times, it came in handy during the corona lockdown. Action was out of work for five hundred temporary workers in the distribution center in mid-December. Most are now back.


In the distribution center I learn some Polish words. Tak (yes) to confirm against the computer, kurwa (whore) to curse if a box falls. Most Poles work hard, I see. I can see from them how you open boxes faster: after you have cut the adhesive tape with your pocket knife, you have to give it a thump with your fist.


Above the 'aquarium', the elevated glass building where foremen and other executives have their offices, an electronic board indicates how many boxes still have to be collected that day. One hundred and fifty thousand, two hundred and twenty thousand... If it exceeds three tons, it becomes problematic. Should we all work a little harder, I ask an experienced colleague? "New. Then the Poles are asked to work a little longer.”


Unlike the employees, the temporary workers have no fixed end times. And they start an hour earlier. A Polish colleague who tells me about this finds it no problem to sometimes work a little longer. Like many of his compatriots in the Netherlands, he has a limited social life. He does sometimes end the working day together with colleagues from the evening shift. Then they smoke some cannabis in the nearby park or bus shelter, drink beer and play music.


In general, temporary workers and employees are satisfied with Action as their employer. (There are many more complaints about the employment agencies, more in the past than now.) The contact is generally friendly, there are career opportunities and temporary workers are not skipped when the Christmas hampers are distributed.


Precious minutes

Much of Action's wide range passes through my hands. Bulk packages of toilet paper, boxes of batteries, Dove cream, pregnancy tests, printing paper, toys, paint cans. I see them on the shelves of the Amsterdam Action branch where I sometimes visit. With some annoyance I look at the clothes drying racks (€7.95), which I received in my container a week earlier so rotten.


On Wednesdays, my foreman walks through the warehouse, clipboard in hand. When he sees one of his team members whizzing down the halls, he or she stops for a moment and looks on his slip of paper for the name in question and his average number of boxes picked per hour for the past week. The computer system has kept up with that.


I am above target twice. “Okay, keep it up,” I hear. But I won't go on like this.


In week three I will allow myself to talk a bit more with colleagues. Pay more attention to what is written on the boxes, from which factories and through which importers the products are purchased. That depresses my average.


More problematic is my fiddling with large plastic storage boxes (€6.95), ironing boards (€12.99) and fake Christmas trees (€29.95). To make room for that in my container, I sometimes have to rearrange it completely, which takes a lot of time. I do not determine myself when my containers are full, the computer has determined that on the basis of the dimensions in the system. And if the computer says it fits, it fits.


Unforgivable

In week four, I'm five boxes an hour below target. It's okay, I think. But my foreman's face is serious. "Where is it going wrong?" I tell him. But the computer had already told him.


The answer is on another piece of paper, which is now also before my eyes. An invisible stopwatch has timed my every move. How long it takes me to load toilet paper, how long to load bins. How that compares to my colleagues. How many seconds pass between boxes in the same aisle, which gives insight into my stacking speed. How long does it take me to seal containers. How long do I take a break.


The productivity of distribution center employees is not only measured down to the second. This also happens with stock fillers who work in the stores, I learned from conversations with a stock filler and a store manager who work in various Actions in the southern provinces.


Trade union director Nico Meijer of FNV has had Action in his portfolio for six years. “I understand that you measure things to keep an eye on productivity. But it has gone too far, every second of every employee is being mapped. You hardly have room in your work to do it your way. Action is not unique in this, this happens in every large warehouse. But Action is best in class in this regard.


The day after the news about my mediocre average, I gear up a few notches. No more talking, smarter stacking, making sure that the material is in order beforehand. My average that day is fine, above the target of an experienced order picker. But in the aquarium it has already been decided by a team leader unknown to me that my probationary period will not be extended. My rising line had dipped. So towards the end of my probationary period, in a job where nothing more than the number of boxes you carry, it's unforgivable.


Too bad, the work was just getting used to. There was a flow in how I got on and off, picked up boxes from the floor and attached them to the computer before they were in my container so that I already got a new assignment. That saves seconds.


I had become used to getting up early, cycling through the pitch dark on the Zwaagdijk early in the morning. Past the fruit and vegetable growers, where many Poles also work, until the blue-lit Action logo on the side of the white block box looms up to my right. I had gotten used to talking into the headset. Listening to the computer. To the realization that you cannot put anything of yourself into this work; you perform.


It had all become normal, but I also realized this: a lot in this distribution center is already computer-controlled, it is only a matter of time until robots take over all this work from me and my colleagues. Ultimately, robots are cheaper.


Small or large purse, Dutch or German; we've all come to love Action. The price tag has made us fall in love and blind. How has the budget fighter kept prices so low for nearly thirty years?

The people of Leiden had missed the Action. Still, definitely a little. It is not for nothing that they are standing in front of the store on the Langegracht on an icy Wednesday in February. The doors of Action remained closed for almost two months because of the lockdown, this is the first day that the price fighter is allowed to sell items (which were ordered online in advance) again.


These people, so in view of all sorts of feathers, had not waited a day, they struck immediately. The newspaper is waiting for them outside. Can we take a look in their bag?


Monique Beemer, 25, from Leiden bought 'those fine household items'. And also thermal leggings, scented candles, and batteries that her grandmother always asks her to take with her. "She doesn't mind that they are cheaper but last less than A-brands." Is it normally pleasant to shop in the Action? “The price is nice!”


A 48-year-old mother who prefers not to put her name in the newspaper: cleaning products, streamers, small toys. It's her son's birthday, so something had to be brought into the house that he can hand out in class.


Student Anna de Groot, 22: rolling pin, washing-up bowl, extension cords and all kinds of other household items. Just moved, hence. In normal times she visits the Action every week, even when she doesn't need anything. She always buys something. Slightly too many scented candles, she must confess.


In which they are all the same: it is primarily the price that made them an Action customer.


With nine million customers a week in 1,748 stores in eight European countries, Action has become a large, popular and profitable retail chain. There is no comparable store with a higher turnover on the European mainland. The financial results of HEMA and Blokker contrast sharply with those of Action.


In everything on the cent

Action stores look the same everywhere. Straight aisles, simple signs, full racks. Bright light, no music. You could call it bland.


"The cheapest possible store design, so that our prices remain low," Actions spokesperson calls it. Action sells six thousand products: cat food, toys, home decor, household items, stationery and ten other product categories. A quarter of the products cost less than a euro. The average product price is below two euros.


To get the prices so low you will never find an Action in the best retail locations. Always just one block away. Or in the basement or on the first floor of a retail property that is in an A-location.


Action is economical in many more areas. The products it sells are never of the best quality and are often produced cheaply in low-wage countries. Action hardly advertises, only in folders and door-to-door papers. On business trips, management is not allowed to spend more than eighty euros per hotel night, in the expensive cities no more than one hundred and ten.


This cheap store design has another advantage, says Tim Zuidgeest, neuromarketer at Unravel Research. Neuromarketers conduct marketing based on insights from brain science. “If the store looks cheap, it also feels like a cheap store to the customer. It reinforces the association they already have with Action. A more luxurious store design would make Action more expensive.”


This is indeed taken into account when refurbishing stores, says Action director Sander van der Laan.


Zuidgeest also notices something else: “Action charges prices down to the decimal point. Another way to get the customer to think: I pay the lowest possible price, apparently it couldn't be cheaper."


Spending money always hurts a little. Except at Action. It costs so little that a purchase does not cost a cent, figuratively speaking. Zuidgeest: “That also means that you don't even take a few seconds to think about a purchase: do I really need it, can someone make it for that price?”


Only one third of Action's range is fixed, two thirds changes. About 150 products are replaced on the shelves in each store every week. Another cleverness in the Action formula: if you see something beautiful in the Action, you should immediately take it with you, you never know whether it will still be for sale on your next visit.


Folk shop

In the Netherlands, three quarters of households shop at Action at least once every six months. Half of the customers are 50+, the younger two age groups are equally divided. Six out of ten are women. More highly educated (36%) than less educated (23%). Half of the customers have a high or middle income, the other half have a low income.


Consumer research from 2019 by retail consultancy firm Q&A shows that the only thing Action really excels at, according to customers, is price. Not in reliability, expertise or range, but Action customers don't ask for that either.


Gradually, Action has become a real popular shop. But the Dutch people could already go to HEMA, which is almost a century old, right? It is known for solid products for unit prices. An insider says that HEMA feels considerable competition from Action. And in that struggle HEMA lost something of its individuality.


We simply find proof of this on the shelves, when visiting HEMA in Almere. The reading glasses at the entrance are immediately wrong, sees the insider, who has an extensive CV in the retail sector. Too much choice. That variety makes the glasses unnecessarily expensive, because HEMA then buys less per type of glasses. We see the same problem with the towels and T-shirts.


Via the office supplies shelf (writing pad: €2.50) to the men's socks (seven pairs for €7). No money, but also not the best quality: we pull a sock slightly apart and can see through it.


Then the Action. The same shopping center in Almere, the same Wednesday morning in December. More customers walk in two aisles than at HEMA on two floors.


We see a writing pad that is the same in everything as that of HEMA, but priced seventy cents cheaper. Candles, towels, T-shirts; Action sells it all for a quarter to a third less than HEMA, according to our sample. At first glance, the quality is not always less. Actions socks remain opaque black.


"Unlike HEMA, Action has kept the range and company structure simple," analyzes the insider. “And simple means: cheap.” He is referring to this: in all Action stores, at home and abroad, the range is ninety percent the same. This way, Action can buy large and therefore cheap. They can also do this by offering the customer little choice. No towels in three different qualities; just towels.


He takes a shiny teapot from a shelf. "Look, I have nothing to do with it. I also don't discover any line in Actions products, it's a mishmash. HEMA has its own style, its own product design. That is worth something to customers, but not thirty percent.”


But shopping here is a bit less pleasant than in HEMA, isn't it? "Yes, but believe me: everyone has forgotten that when they walk home with a full bag of stuff for which they have paid twelve euros." Neuromarketer Zuidgeest endorses this.


Good or just cheap?

So we are tempted in all kinds of ways to buy from Action. And we are pleasantly surprised how little we have to pay for it. (Action's former motto: “More than you expect for less than you can imagine.”) But are we still happy with our purchases when we put them to use? Are Actions products good, and not just cheap?


Van der Laan is also aware that Action has a reputation among some customers for selling items of moderate quality. That touches him: “If you buy a sleeping bag or a tent from us, then you should be able to use it again the next camping trip. I don't want to be in charge of a company that sells bad products."


Action has said it has invested in the quality of its products over the past five years. Among other things, by hiring more product technologists, who provide buyers with advice on the specifications that products should meet. Customers returned fewer defective purchases last year than the year before.


The question is whether the customer really cares if Action's handsaw (€2.99) does not last longer than one carpentry loop. Probably not. At that price, you could possibly repurchase the same saw three times before hitting the cost of a quality saw.


Post-purchase rationalization also takes place in our brains, notes neuromarketer Zuidgeest. “If a purchase is disappointing, you can deal with it in two ways: you admit that you made a bad purchase, or you make the bad qualities of the product less important. Because the first will make you feel much worse, your brain will choose the second mindset more often.”


Chinese supply line

So we don't think about it in the store, nor if a purchase is disappointing. Still, it's good to ask yourself: is there something or someone who pays the price for the low prices I pay?


To do this, we must first look at the origin of Actions products. Action does not buy up so much leftovers anymore, only a maximum of ten percent of the range comes through such a sales channel. Action (also) buys directly from A-brands such as Unilever. Action also has private labels, the production of which often takes place in Chinese factories. Where, for example, Blokker also purchases a lot.


Six out of ten products on the Action shelf come from Asia. Actions thirteen importers visit Chinese fairs to discover new interesting products. 85 people from a Hong Kong purchasing company join in the search. They also pay attention to what the competitor is selling.


Van der Laan, with a vase in his hand as an example: “Perhaps we first saw this vase at a competitor, with a price tag of € 6.95. Then we take that vase to our supplier and ask: can you make this? This thickness, this shape, but for €2?”


Action hires independent third parties to audit factories announced and unannounced for compliance with Action's "ethical purchasing policy". It states that no children work in the factory and that workers receive a living wage, can do their work safely and do not work excessively long hours. This is not always self-evident in factories in the Far East. According to the latest government figures, a Chinese factory worker earns an average of around four euros per hour.


In 2019, 377 inspections took place. Child labor was discovered during an unannounced inspection in two different factories: fifteen-year-olds who did packaging work during the summer holidays.


Problems were also encountered in 24 other factories, ranging from factory workers who had too few rest days to blocked emergency exits, which can be life-threatening. With 21 of these, Action has made improvement plans and is still doing business.


A spokesperson says that improvement plans have also been drawn up with the two factories where children worked, but that there was no improvement and the cooperation was eventually broken. With webinars and reminders for suppliers, Action tries to prevent child labour.


More checks were carried out in 2020, the number of problems identified was halved. No cases of child labor were discovered last year.


Hidden costs

To find out how and to what extent the planet suffers from our bargain hunting, we first do some shopping ourselves at Action. We buy toys and paper chip cone bags made of FSC-certified wood (€4.99 and €0.59), refillable 'eco' kitchen cleaner (€1.49) and biodegradable household wipes (€0.79).


We will also bring along a plastic fake Barbie doll ($3.99), a simple cotton T-Shirt ($1.99), a polyester stuffed animal ($3.99) and a 'party stick with LED light', a kind of lightsaber ($0, 99). We ignore the plastic Easter bunnies and eggs aisle.


Since 2019, we have found Action's concrete sustainability ambitions in annual reports. With this Action, so to speak, arrives a little late at the party of sustainable retailers. But the prize fighter has more than achieved his self-imposed intermediate goals.


By the end of 2020, half of all Action's wood products had to be made from wood from sustainably managed forests. Result: 60 percent. Forty percent of all cotton that Action purchases had to come from more sustainable sources by 2020. Result: 76 percent. By 2025, all Actions wood and cotton must be more sustainably sourced. Action director Sander van der Laan says he is 'well on his way', but also wants to do 'more every year' in this area.


When it comes to the amount of plastic products that Action sells, it sets no targets for itself. Action did stop selling plastic products that you can only use once, such as plastic disposable tableware last spring. (European legislation had already been announced to ban this as of this year.) And Action wants to reduce plastic packaging. That is complex, a packaging manager will soon be hired who will have to make smart choices in that direction.


We display our purchases at the desk of Roel Drost from Ecochain. Drost makes environmental impact analyzes for companies. Each phase in the life cycle of a product is examined and its impact calculated in euros. From material extraction and production to transport, use and waste processing.


We hold the same products in front of the camera in a video call with Michel Scholte, co-founder and director of True Price, which has developed a calculation method to calculate 'external costs' of products (also: hidden costs). These are costs that customers, sellers and producers do not pay, but sooner or later will be borne by society.


Drost picks up our bluetooth speaker (€4.99) bought at Action. “Because of my previous work experience at Philips, I know that you would have to charge twenty to thirty percent on top of the sales price to cover those hidden costs.”


He likes the wooden toy: “It feels robust, I think it will last much longer than all those plastic parts I see in the other toys you brought with you. And the wood is obtained in a sustainably managed forest.” The same goes for the wooden birdhouse, which fortunately is not wrapped in plastic.


Drost abhors the lightsaber: “A junk product. No one needs it, but petroleum has been extracted for it that you will never get back. You may use it twice, then you throw it away. The majority of plastic waste is incinerated.”


The doll set is also all plastic. Probably the consumer will use it a little longer than the lightsaber, but not long enough to outweigh all the drawbacks, all the hidden costs.


"Little Joy"

Action takes several steps to reduce its ecological footprint. There are solar panels on the roofs of distribution centers. There are double-decker trucks that can transport more containers at once. Plastic and cardboard from packaging material left over in the stores is collected by Action itself.


The most sustainability gains can be made in the range: which products Action sells, how they are manufactured and which raw materials are extracted for them. This is apparent from research that Action had carried out last year. That is now being given priority, says Van der Laan. Action has therefore started to purchase more sustainable products, such as the FSC-certified wooden toys from the house brand Mini Matters. Some cleaning products are refillable.


Van der Laan: “What we do in this area has a direct impact. Our low price makes sustainable toys accessible to the masses.”


The same masses can also buy environmentally unfriendly items from Action, items that are hardly used, perhaps not even really needed. Other stores also sell these kinds of products, but isn't it the case that Action with its low prices tempts customers - quite successfully - to make these kinds of purchases?


“A lot of what we sell are everyday products that people need. We also sell photo frames, garden items… Thanks to our low prices, our customers also easily buy the less necessary items. We give a little joy to people who otherwise could not afford it. A single mother living on €950 a month is happy to have a shop where she can buy Christmas items for a few euros.”


“The entire shopping street is doing far too little to limit the environmental impact and to eradicate poverty in the production chain,” says Scholte of True Price. “Action is exemplary, but I can tell the same story about HEMA and Blokker. We as consumers also pay far too little for their products.”


Listen now to our four-part podcast series in which we unravel the secret of Action and also reflect on the situation of Polish migrant workers


See here for more: https://www.noordhollandsdagblad.nl/cnt/dmf20220207_46633860?utm_source=www.linkedin.com&utm_medium=referral&utm_content=/



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