Impact of Corona in Belgium

The dictated restrictions of the Belgian federal government, the counties and the cities have been enforced long enough to structurally disrupt the economy and intrinsically change the behaviour of nearly all consumers. According to the predictions of the experts of Euler Hermes, the real impact of Covid-19 will only be measurable in 2023, and it will be late 2022 before the economy recovers to the pre-corona level, unless the situation worsens.

10% of Belgian citizens found themselves materially and socially deprived in 2020, while nearly a quarter of the population dwells in de danger zone of just-over-broke, meaning they aren’t financially strong enough to recover from an unexpected expense and are staying afloat living paycheck to paycheck. (source)

A feeling of uncertainty and doubt started to spread shortly after the first lockdown on the 18th of March in 2020, mainly amongst the workers in the service industry, the entertainment and events industry, close-contact professions and in retail. This reflects in the conclusions released by statbel which indicate that the over 135.000 people working in restaurants and bars weren’t able to work for 6 months in 2020. Adding Q1 2021 to this number, this means these workers have been without a full paycheck for 9 months in total.

The hotels and related hospitality services, aviation industry and booking/travel sector also reported  a detrimental decline during 2020, together with the collapse of local, regional and national touristic services.

Despite the global statistics, in the face of Coronavirus pandemic, Chinese owner Fosum resurrected the Thomas Cook brand as an online-only travel agent in September 2020.

For Neckermann, the clock is ticking. They have until February 22nd 2021 to find someone to buy them out and take over the debts. Fingers crossed for the 150 employees.

The Belgian automotive industry reported a 21% decline in sales of new and second hand cars, while De Lijn saw a 62% decline in passengers. NMBS published a 40% decline in train users for 2020.

Travel abroad declined with 50% between mid-June and mid-July, and also with 50% during the summer holiday (July-September 2020) – compared to 2019. During the first lockdown (March to mid-June) virtually NO travel has been reported.

Between the 2 lockdowns, Belgians did rediscover their own country, resulting in a 30% increase in the statistics compared to 2019.

The marketing and advertising sectors have always been fueling one another. Market analyses show that the global advertising industry is on the rise again and is projected to grow by 5.9 percent in 2021.  On the other side of the scale it would be interesting to see the impact of measures such as social distancing, work from home or total lockdowns. During 2020, this led to a significant change in how or when consumers were exposed to advertising and it therefore resulted in reduced media spending. Curious to see if the projected growth will cover the experienced loss of income for the agencies and the impact it had on visibility or sales for the brands.

Additionally, the compulsive work-from-home guidelines have been in place since October now – nearly 6 months already- leaving a vast amount of office space unused. Many companies have decided to start downsizing their real estate footprint because of these changes, in an effort to reduce monthly rent and utility fees, banking on the newly discovered benefits of remote workers.

Brick-and-mortar retail turnover got hit pretty hard because of the restrictions during the lockdown, while the online commerce (mail orders) clocked a 52.6 % growth in December and a 55.6% growth in November of 2020. For instance: Bol.com (owned by the Ahold/Delhaize concern) reported a 70% growth in sales for Q4 2020. Coolblue reported a growth of 34% in 2020, flirting with 2 billion in sales, mostly allocated to the work-from-home situation. Coolblue clocked 1.75 million home deliveries.

It will not come as a surprise that the pandemic resulted in an exponential growth in consumer spent for hygiene & health products, followed by household cleaning products and food take-away/delivery.

Deliveroo found itself in the right place to ride the pandemic’s positive wave of change. With expansion plans for an additional 15 cities in Belgium announced, it’s looking to hire 500 extra employees to cover the total of 31 cities. Their 3000 workers deliver food for 3000 restaurants. They’ve also decided to move into the golden ‘last mile’ race of grocery delivery, which might be good news for Aldi and Carrefour, who both had 441 retail locations in 2020, and Colruyt with its 233 locations.

Carrefour did report a turnover growth of 7.9% for 2020, turning last year into the best performing year they’ve had since 2000. 70,7 billion turnover for the entire group (not just in Belgium). e-Commerce sales rose sharply, by more than 70% to 2.3 billion euro. The retailer is on track to reach 4.2 billion online sales by 2022. Sales of organic products grew by 18%, private labels increased their market share to 29% of sales. The target is 33% in 2022.

The bitter pill for Carrefour to swallow: net profit fell 43% to 641 million euro, due to higher costs caused by the Corona crisis. The retailer announced new cost cuts amounting to 2.4 billion euros by 2023.

Ahold Delhaize ended the 2020 financial year with sales of 74.7 billion euros, a growth of 14.2%. The retailer was able to strengthen its position in every market in which it operates. Online sales even increased by 84.2% in the fourth quarter and 67.4% for the full year, to 7.6 billion euros.

Despite its 6th place in the top 20 of supermarkets based on the number of stores, Colruyt was the most profitable supermarket based on revenue per shopfloor area, with a worth of 15.800 euros per square meter. In the top 20 of retail chains ranked by number of stores, Leonidas took 3rd place and butchery Renmans came in 5th. These last 2 are the first Belgian brands in the list. (Aldi: German, Carrefour: French).

Remarkably enough, statbel reports that the real estate sector did not experience a significant impact due to 2019-nCoV, although the 3rd quarter of 2020 reflected a 10% decrease in transactions due to limitations to visit available locations together with a representative. The value of real estate increased for Flanders for a regular house in the streets with 4.2%, for a stand-alone house with +3.7% and for a flat +4.9%. For the Walloon region it was +3.7%, +0.7% and +3.3%.

The Brussels capital region was best in class (brace yourself for this) with a +4.9 increase for a house between others, a 45.2% growth for an open plan and a 7% increase for apartments.

Several retail corporations find themselves drowning in a seemingly endless debt, and mounting interest payments are a major factor for why many will choose to close brick-and-mortar stores sooner rather than later.

Some analysts predict a temporary surge in physical retail activity, with people excited to leave their homes and shop as restrictions are gradually lifted. Still, the downfall of the shopping mall is inevitable and one that started long before the coronavirus pandemic.

Unfortunately, many smaller retail chains and small business owners are now experiencing great financial challenges as well, despite their attempts to stay afloat by injecting personal capital after using up their business’ financial resources.

Data is the key to understanding your customers, your audience. The deeper personal connection and custom experiences you need to connect with your buyers is one that can only be made if/when the data you collect allows you to single out and understand every customer and grow beyond simple demographics or segments. Connecting to individuals at scale is the future.

4P square can help you to map how and where you collect information and which suitable offers can be predicted from it. The future vision we have is one where brands are part of the fabric that builds and supports communities by reducing all friction and establishing an immersive and engaging, hybrid connection. We believe in an omni-channel strategy, powered by data-driven differentiation models to develop the ultimate customer loyalty and maximum customer lifetime value.

Miel Van Opstal is a former marketing manager of 4P square. He’s a change agent, shaping the future, standing at the crossroads of behavioural design, technology, digital marketing strategy and consumer psychology.