Picnic CEO Michiel Muller warns Amsterdam unicorn may quit the Netherlands if forced under supermarket CAO

Arnhem–Leeuwarden Court of Appeal says online supermarket Picnic will be treated as a traditional supermarket, triggering a significant financial impact. Will Picnic stay or shift?

Amsterdam-based online supermarket Picnic could pull out of the Netherlands if forced to comply with the supermarket Collective Labour Agreement (CAO). 

Picnic CEO and co-founder Michiel Muller issued the warning during an interview on the radio programme Sven op 1 on August 20.

A CAO or Collective Labour Agreement is a collective agreement between employers and employees which deals with wages, working hours, notice periods and pensions. 

Muller argues that without an exemption, labour costs would jump about 40 per cent versus store-based rivals, making the business uncompetitive.

“That’s right. If the (minimum) youth wage isn’t abolished, then there is no level playing field for us. Because then we would have 40 per cent higher costs than the stores. Then you can no longer compete and so you have to take your investments to other countries. This is exactly what the other supermarkets try to do, to use the CAO rights to halt a competitor,” he says. 

Picnic has filed a fresh exemption request with the Ministry of Social Affairs and Employment.

Muller’s counterpoint

Muller counters that supermarkets benefit from cheaper labour structures through their distribution centres.

“Traditional supermarkets rely on agency-hired migrant workers on temporary contracts, which keeps their labour cheaper and often outside pension contributions,” he claims. “We employ people on Dutch contracts who do build up pensions.”

Expansion abroad

Even as Picnic faces regulatory pressure at home, it has been investing abroad. Picnic recently opened a fully robotic warehouse in Oberhausen, Germany. The facility is equipped with 1,500 robots and processes up to 33,000 orders per day. 

According to the Dutch company, the facility can serve 200,000 households each week. 

Here’s a quick look at the German facility: 

Notably, Muller, in the podcast, reveals that the Minister-President of North Rhine-Westphalia invited the company to relocate there.

The legal battle

Back on June 24, the Arnhem–Leeuwarden Court of Appeal ruled that online grocers like Picnic and Flink run a “virtual” supermarket, overturning the companies’ claims that they are not supermarkets. 

As a result, both companies must repay wage supplements to around 35,000 employees for the period from September 13, 2022, to July 1, 2023. This could have a significant financial impact.

Michiel Al, executive director of the FNV union, says, “The judge once again emphasises that online supermarkets and instant delivery services are also supermarkets, albeit in a digital format.”

The ongoing dispute over whether online grocers qualify as supermarkets has been clarified. 

The ruling confirms that digital supermarkets must adhere to the same labour agreements as traditional supermarkets.

However, both Picnic and Flink argue they are different from traditional supermarkets and have negotiated their own e-commerce CAO.

They also say their workforce is older and works more evenings and weekends, which makes the supermarket CAO costlier for them.

The Netherlands Authority for Consumers and Markets recently stated that it could become more difficult for Picnic to compete with traditional supermarkets if the supermarket collective labour agreement (CLA) becomes mandatory for grocery delivery drivers.

“Online supermarkets often operate with a very different business model than brick-and-mortar supermarkets. For example, Picnic doesn’t have stores, but a delivery network, and the company relies primarily on adult employees with driver’s licenses. According to the Netherlands Authority for Consumers and Markets (ACM), a general obligation in the collective labour agreement could be detrimental to these types of companies, weakening their competitive position,” says ACM.

As a result, the regulator has asked caretaker Minister Eddy van Hijum (Social Affairs and Employment) to take this into account when deciding on an exemption from the CLA.

The e-commerce industry association E-commerce Nederland, which represents Picnic and Flink, has appealed that ruling and now plans to take the case to the Supreme Court, according to the report.