No retailer has grown as strongly in our country in recent years as Action. This is evident from a report by the retail specialist Gondola. Between 2015 and 2022, Action saw its turnover grow by 168 percent to 1 billion euros. Where does that success come from? Three retail experts explain.
Gondola said it bundled the most important developments in the retail sector over the past ten years for the first time in its Gondola Retail Report. It shows that the budget store chain Action has seen its turnover grow by 168 percent since 2015, to 1 billion euros. “That’s huge. The increase is mainly due to new stores, but turnover per square meter has also increased,” notes Silvie Vanhout, retail expert at Gondola.
To understand Action’s success, we must look at the retail chain’s working methods, says Els Breugelmans (KU Leuven). “Action only stocks products that it can purchase at an exceptionally low price. This concerns items from China, but also excess stock. Products are also often purchased in huge quantities to keep the price down.”
Action does not actually have a fixed offer, but its customers accept that, says the expert from KU Leuven. “The concept revolves around browsing. This is not the case in supermarket chains, where customers expect products to always be available.”
‘It is the young people who are at the forefront of the climate marches, who afterwards go shopping at SHEIN or in Action’
Els Breugelmans, KU Leuven
Action saw its turnover explode during economically difficult years. Is it logical that Belgians continued to shop around? “Yes, because consumers get the idea that they are saving by shopping at Action, while they are actually spending money unnecessarily. It is a paradox,” says Pierre-Alexandre Billiet of Gondola. “Action shows wonderfully how humanity works. Overconsumption is the result of triggers in our reptilian brain that is hungry for dopamine. Buying simply gives a satisfying feeling and there is no rational explanation for that.”
Breugelmans also notes this. “It is the young people who are at the forefront of the climate marches, who afterwards go shopping at SHEIN or in Action. Although the chain stands for everything that the young people protest against, that does not matter. Action has also managed to improve its image. The Action stores were first seen as for people at the bottom of the social pyramid, but they are for everyone. Action provides inspiration and is for creative people. This shift has partly come about through marketing, but mainly through the power of word of mouth.”
Els Breugelmans and Sylvie Vanhout find it most interesting that Action’s turnover growth is not only due to the growth in the number of stores, but also to the growing revenue per square meter. “That has a lot to do with the improved image: the fact that it is both a store for people with a low budget and an inspiration store,” Breugelmans explains. “I also expect that Action will know better what the consumer wants over the years. When Action analyzes its sales data from recent years, it increasingly knows which products score.”
Action is a strong grower, but the question is whether its business model is also ready for the future. Action, for example, does not have a webshop, in a society that is highly digital.
‘There is a good chance that Action’s business model will ultimately destroy itself’
Pierre-Alexandre Billiet, Gondola
“It is logical that Action does not have a webshop, given the model. The product offering changes so quickly, which makes website management more difficult. In addition, Action does not want to attract targeted buyers, but buyers who walk in without a specific plan and then leave with all kinds of things,” says Els Breugelmans.
Pierre-Alexandre Billiet questions the role that sustainability will play in Action’s growth potential. “For a long time, the retail sector was able to grow simply because population numbers increased and consumption increased. This means that investors sometimes see retail shares as safe, but that perception may change over time.”
A movement is emerging aimed at consuming less, says the Gondola expert. “It is expected that more than 50 percent of Belgians will soon be overweight. That will therefore become a major problem in our society. The emphasis will become increasingly clear in the coming years consume less lie. This can already be seen in an initiative such as BE.COCO, a campaign by State Secretary for Consumer Protection Alexia Bertrand, about conscious consumption.”
We are facing a fundamental change in both demand and supply, says Billiet. “The old foundations of consumer society – producing a lot and cheaply – are being questioned everywhere. Action’s business model simply cannot be reconciled with consuming less. So the question is how Action will respond. There is a good chance that the business model will ultimately destroy itself.”
Intermarché and Lidl
Action is the fastest growing retail chain in Belgium, but it is followed by Intermarché and Lidl. Intermarché grew by almost 69 percent, Lidl by 50 percent. “The growth at these two food retailers only comes from store openings to a limited extent, because Intermarché, for example, has 3 fewer stores than in 2015, but they are still doing much better,” says Vanhout.
According to her, 300 stores have been added to the entire retail market in the past 10 years. “So an average of 30 new stores per year. That seems like a lot, but it isn’t if you know that Albert Heijn and Jumbo previously had very big ambitions.”
The report also shows that the ratio between franchised stores and company-owned stores has remained approximately the same over the years, at 50/50. However, this is mainly due to the near-food chains that do not only sell food and mainly use their own stores. Franchise stores have become more popular in food retail over the years.