Inside This Issue - News
Ahold moves to hone customer connection
December 19th, 2011
AMSTERDAM – Ahold NV has unveiled a growth strategy designed to reverse slowing sales growth and cut costs in its two major markets of western Europe and the eastern United States.
In this country its Ahold USA unit operates five divisions:
• Giant Food Stores, based in Carlisle, Pa.
• Giant Food, based in Landover, Md.
• Stop & Shop New York Metro.
• Stop & Shop New England.
• Peapod Inc., an online grocery delivery service headquartered in Chicago.
Growth plans for the United States are focused primarily on boosting online sales, expanding same-store sales with new loyalty initiatives and increasing store brand penetration. In Europe the retailer is looking to expand its footprint by rolling out convenience stores and opening at least 50 supermarkets in its newest market, Belgium, over the next five years.
"Our new growth strategy will ensure Ahold remains successful and at the forefront of the food retail industry," said Ahold chief executive officer Dick Boer during the company’s Capital Markets Conference last month. "We are reshaping our retail businesses to connect with our customers in a more personalized way and to provide an even better shopping experience in our stores and online."
Boer defined six strategic pillars that will guide and shape the company’s future course:
• Increase customer loyalty and drive identical-store sales growth.
• Roll out successful store formats, expand online and build better product assortments.
• Expand in and around Ahold’s current markets in the United States and Europe.
• Leverage such capabilities as store brands, customer loyalty and format development across the company to drive sales, lower costs and simplify the business.
• Build on and drive the company’s corporate responsibility strategy to engage customers and employees.
• Attract and engage the best talent in the industry.
To accelerate sales growth Ahold aims to triple its online sales to 1.5 billion euros ($2.0 billion) by 2016, and that will mean a bigger role for its Peapod unit, which already is the No. 1 online grocer in the United States, operating in 13 states and offering about 12,000 SKUs. While the Peapod model includes grocery delivery, going forward Ahold will introduce pickup points in both its U.S. and European markets, allowing customers the option to order their groceries online and then pick up their orders at designated locations.
While Ahold management did not reveal planned store opening numbers for this country, it did declare its intention to enlarge its geographic footprint in both Europe the United States, through either organic growth or acquisitions. It is also considering entry into new markets that offer suitable opportunities for profitable growth.
In addition, Ahold USA intends to boost its store brand penetration level from 33% (over 17% excluding perishables) to 40%.
Perhaps the biggest store-level initiative for the U.S. chains is the decision to remodel 100 Stop & Shop and Giant-Landover stores to incorporate a center-store concept developed at Giant-Carlisle that has been successful in getting customers to shop the entire store. As deployed at Giant-Carlisle, the concept involves creating exciting and appealing zones such as a seasonal aisle, a bargain aisle, a beverage aisle and, optionally, international food.
The initiative includes right-sizing the general merchandise categories and introducing more efficient and varied product assortments within categories.
During the course of this year six pilot projects will be completed, with a total of 50 remodels targeted by the end of 2012 and the remaining 50 to be completed in the course of 2013.