Our strategic take on Colruyt closing Collishop

Colruyt Group is a Belgian family-owned retail corporation. It manages the Colruyt supermarkets and other subsidiaries such as OKay, Bio-Planet, DATS 24, DreamLand, DreamBaby, and more. On September 7th, 2020, they announced the closing of Collishop, one of the oldest webshops in Belgium. The rationale behind this decision? Competition with the multi-brand retail players like Amazon and bol.com has become too fierce. Instead, Colruyt Group believes their strength lies in servicing clients in niche non-food markets such as toys, for example. Hence the decision to invest in the e-commerce platforms of their sub-brands. Stefan Jenart, Head of Strategy at Duke & Grace, took up his pen to share his take on this decision.

I’m waiting to collect my groceries from the Collect&Go booth at my local Colruyt and I can just kick myself. It dawns on me that perhaps I could’ve found the other products on my shopping list in the Collishop. I think to myself: "Stupid, why didn’t you think of that sooner?"

On second thought, the real question is: why didn’t Colruyt make me think of it? Why didn’t they give me a small nudge during my online search last night? Or better still, why wasn’t that Collishop product displayed on my Collect&Go account? I had to go to the shop anyway, so I could’ve easily killed two birds with one stone. I realized how relevant Collishop could be to me in terms of convenience.

I remember the period right after the birth of my daughter when we called on Collect&Go even more than usual. As Dreambaby customers, it was up to us to monitor when one of the products on our birth list was delivered to our local Colruyt. Subsequently, we had to include that product manually in our next Collect&Go order. I can understand how challenging this can be in terms of logistics, but it’s beyond me why you would needlessly expose the shortcomings of your internal organisation.

From an external perspective, it’s mind-blowing to see to what extent Colruyt continues to think in silos. And we all get to see this internal inefficiency. The different brands in the Group’s portfolio might as well operate from different continents. There isn’t the slightest trace of synergy. What’s more, I read (De Tijd, Wednesday 9 Sept 2020) that even in the competitive post-rationalization of the decision to close the Collishop webshop, Colruyt thinks exclusively from the Collishop silo.

You see, Amazon or Coolblue are by no means untouchable rivals for Collishop. On the contrary, Colruyt (Group) could be a formidable competitor for bol.com and even Amazon, precisely because of their brand portfolio. Indeed, Colruyt has a huge competitive advantage over those other e-commerce webshops that they’ve never capitalized on. Take the combination of food and non-food in a single offering, for instance. Imagine the possibilities of a one-stop Colruyt webshop (across all existing silos or brands). It’s something others can only dream of.

Now look here, Colruyt, your decision is understandable from a classic offline retail standpoint. Particularly from your strong cost-saving focus, this decision can even be called logical. However, your decision is completely unrelated to e-commerce. You’re not taking the digital reality into account. e-Commerce requires a totally different kind of reasoning. Successful e-commerce companies work from the customer experience inwards. Starting from the user experience, they do everything in their power to meet those expectations with their internal organization, if need be only on a digital level.

As soon as you put the customer at the heart of your strategy, and above the historically grown internal ‘brand silos’, then you will automatically tap into Colruyt’s potential as an outstanding market player. You start by utilizing the existing information of the XTRA card (membership card for Colruyt customers) across the brands. On the basis of customer journeys or scenarios you can then identify the digital functionalities you’ll need. Internally you organize yourself with journey owners who think from a customer perspective instead of department representatives. You create an overarching Colruyt platform where, for instance, a family with one daughter can find everything they need. Somewhere they can place items from Dreambaby, ZEB, Dreamland, Bioplanet, Newpharma, Colruyt ... in the same basket. Such a Colruyt e-commerce platform would be able to compete with the likes of Amazon, bol.com and Coolblue.

You decided to pull the plug on Collishop but that won’t solve the problem. As long as you keep trying to replicate the offline retail experience online, this will remain your Achilles’ heel. By continuing to build separate (online) shops you are driving your customers into the arms of your competitors. You are literally herding them out of your shop with a single message: "We don’t sell this item here". In other words, your strategy to focus on specialty non-food branches is already doomed to failure. If you continue to base your strategy on a digital niche and silos then - to cite just one example - the Dreamland webshop will face the same problems as Collishop.

Your digital strength doesn’t derive from treating the brands as separate islands. The digital opportunities for Colruyt (Group) lie in capitalizing on the tremendous power and potential of your portfolio as a whole.

Of course, there’s a chance your secret agenda has always been to integrate your entire portfolio from a customer standpoint in a new Colruyt Group e-commerce webshop. In that case: Amazon, consider yourselves warned. Curious about our strategic take on your business?