Colruyt is a familiar Belgian retail chain, but its OKay c-stores are fairly unknown outside the country itself. Nicola Cottam finds out more.

Colruyt makes rather audacious, but probably true, claims about offering the ‘best quality goods at the lowest prices’ at its supermarkets, and these attributes have been extended to the OKay brand - but with plenty of added extras.

Like Colruyt supermarkets, OKay stores are basic. Most of the 35 sites have been built on brownfield locations and are rather featureless structures. Inside, the atmosphere is friendly, despite the quite stark warehouse characteristics, with basic metal shelving stacked three metres high with large quantities of goods.

But when you can buy anything from deli-quality cheese to fresh meat at ‘the lowest price’, who really cares about aesthetics?

OKay director, Chris Van Wettere, says: “There are no frills at OKay stores. There is no music on the shop floor and no plastic bags because customers would bear the cost. OKay is proof that quality and service do not necessarily come at a high price to customers.”

Fresh is where OKay stands out from its c-store peers. The ‘Fresh Mart’ store-within-a-store concept is an impressive set up and comprises an immense fresh and chilled range that includes a wide selection of fresh fruit and vegetables; fresh meat and fish; every type of cheese imaginable; deli meat; herbs; and of course yogurt and milk - to name but a few items.

“Fresh Mart is basically a huge fridge that keeps all fresh and chilled products in prime condition,” explains Van Wettere. “These products are delivered every day using a ‘cold chain’ system to ensure there is no compromise on quality. The whole system is extremely efficient, which enables us to offer our clients the lowest prices.”

A ‘convenient’ chilled product range - which isn’t available at Colruyt supermarkets - was showcased at OKay when the first store opened in 1998, and remains a key part of the offer. “There isn’t a great market for ready meals in Belgium, but we introduced pre-packed salads and olives in sauces, and a selection of meals to give customers the opportunity to try convenient food,” says Van Wettere.

“Fresh bake-off is also available at OKay, which again we don’t have in our Colruyt stores. A traditional baker delivers freshly baked bread and fresh pastry to the stores, and a number of speciality pastries are baked on site throughout the day.”

Local products and organic lines are both featured in store (the latter under the Bio-guarantie label), and regular tastings of chilled and fresh lines give customers the opportunity to try before they buy.

But this is just the tip of the iceberg. OKay has the luxury of access to Colruyt’s 200,000sq m distribution network and it certainly makes the most of it: wines, spirits and beer; household and paper goods; a wide selection of ambient products; soft drinks; frozen food; cigarettes; seasonal displays - the range is as comprehensive as any supermarket but in a more compact and amenable environment, making the choice between products easier and therefore the shopping experience faster.

OKay prides itself on high service levels. There are plenty of staff present on the shop floor to give advice or answer queries, and goods are packed at the checkout by cashiers (in the absence of conveyor belts) direct from the trolley into boxes. According to Van Wettere this system benefits both staff and customers: “It’s a welcome relief for most customers and a much more efficient way of doing things.

Since staff don’t sit down at the checkout they are less likely to suffer from back problems.”

OKay operates a three-tier pricing system with brands the most expensive, followed by cheaper own label lines, and Basic, the cheapest. Van Wettere explains: “Basic products have red shelf-edge labels so that customers can quickly identify them. This price band is available on every product almost all the time and gives customers a choice of how much they want to spend. Basic products are sourced from a variety of suppliers, and are sometimes fancy brands. We offer quality in every level of price.”

In addition, competitors are closely monitored so that OKay can offer the lowest prices on promotions. Promotional leaflets, which are sent to registered customers 13 times a year, are presented like a menu and recipe book rolled into one, with ideas for aperitifs, entrées, main courses, cheeses, desserts, coffee and presents. It’s all part of the outstanding service package.

All new recruits at OKay undertake a week of training and are encouraged to work their way up.

Van Wettere says: “We never employ managers from outside. I myself started out on the shop floor and was a store manager for 10 years before being promoted to district manager, then head of department, and finally a director. A business is more likely to be successful if staff have worked their way up and therefore know about every aspect of the operation.”

As a result he is keen to stay close to shop-floor staff and visits each store around seven times a year. This is going to be increasingly difficult as the format expands - the target is to open seven new stores every year for the foreseeable future - but it’s still high on Van Wettere’s agenda.

So with a director committed to ensuring staff and customer satisfaction at all times, it’s not surprising that OKay is a rising star within Belgium’s c-store society.

Number of stores: 35 OKay outlets
Stores sizes: up 400sq m
Staff: seven to eight in each store
Key selling point: Fresh Mart
Main competitor: Delhaize
Opening hours: 8.30am - 7.30pm, six days a week. OKay doesn’t open on a Sunday
Busiest times: mornings and evenings

In 2004, total retail sales amounted to E53.4bn.

Food, drink and tobacco retailers’ sales are forecast to reach E24.74bn in 2005, up by 4.1% on 2004 when sales reached E23.76bn.

Independent food retailers had the largest share of sales in 2003, at E15.6bn; department stores and hypermarkets sales reached E3.0bn; while the multiples’ share was E9.7bn.

The grocery market leader is French-owned Carrefour, followed by Delhaize Group and Colruyt - the two largest domestic players.

As well as owning Colruyt supermarkets and OKay c-stores, The Colruyt Group’s portfolio in Belgium includes organic chain Bio-planet, and non-food stores DreamLand, DreamBaby, Dream and Collishop. It also supplies to Spar and Alvo independents in the region.

Like its neighbour the Netherlands, the Belgian retail sector is highly mature and in some sectors fragmented. In others, such as the grocery market, it is sufficiently concentrated so that the major retailers, such as Delhaize Group, have chosen to focus on overseas markets for new development opportunities.

Colruyt has experienced impressive growth over the past five years, although it is starting to come under increasing pressure from rival German discounters Aldi and Lidl.

French Intermarche hypermarkets and supermarkets also have a presence in Belgium grocerysector.
Source: Mintel’s European Retail Handbook - October 2005