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Ahold Delhaize unveils new growth and investment plan

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ZAANDAM, the Netherlands — Ahold Delhaize is kicking off a new growth and investment plan designed to support its vision of offering the “leading local food shopping experience for customers,” while also enhancing its digital and supply chain capabilities, and increasing its focus on health and sustainability.

The new plan, unveiled as part of the company’s Investor’s Day, represents the next chapter in Ahold Delhaize’s Leading Together strategy as the company looks ahead towards 2025.

“Our Leading Together strategy has proven to be strong in recent years, and is a great foundation as we head into the future.” Ahold Delhaize president and CEO Frans Muller said. “The COVID-19 pandemic put our people and our strategic choices to the test, and through it all we were able to always deliver for our customers, our communities and our associates in all the brands and support companies. I cannot stress enough how proud I am of our achievements. The pandemic has accelerated the pace of change in the retail industry. It has also changed consumer behavior permanently with people shopping more online, eating more at home and having a bigger interest in local and healthier food.”

Building on the Leading Together strategy, the company has identified four priorities to double down on between now and 2025:

  • Serve customers through deeper digital relationships across our omnichannel Customer Value Proposition (CVP)
  • Accelerate development of/investments in omnichannel capabilities and continue to be the best local operators
  • Lead the transformation into a healthy and sustainable food retail system
  • Leverage the portfolio to create the ultimate ecosystem for smarter local customer journeys

Investing in Digital proposition

Customers are looking for high-value, convenient and personalized solutions – and the ability to shop whenever and wherever they want, the company said. With that in mind, Ahold Delhaize said it will invest in its brands to provide shoppers relevant products and services, promotions, tailored customer experiences and premium subscription memberships. To enable customers to shop in this way, Ahold Delhaize will accelerate its investments in building scalable and repeatable operational capabilities, with a sharper focus on digital, online, data and automation.

ahold delhaizeIn doing so, Ahold Delhaize expects to accelerate net sales growth with €10 billion in incremental sales from 2023 to 2025. Net consumer online sales are planned to double between 2021 and 2025. In addition, Ahold Delhaize plans to have eCommerce profitable on a fully allocated basis by 2025.

“To support these plans, the company will increase investment levels from 3% to 3.5% per annum to fuel growth,” Ahold Delhaize chief financial officer Natalie Knight said. “We will continue to be the best operator in the industry, underlined by our world-class operating margins. As part of our planning toward 2025, we are committing to even more ambitious Save for Our Customers targets: about €4 billion by 2025. We will also use our knowledge and experience to make eCommerce profitable by 2025, and I am pleased to announce a planned €1 billion share buyback for 2022.”

Establishing one of the largest supply chain networks on the U.S. East Coast

In 2019, Ahold Delhaize USA launched its supply chain transformation, focused on bringing back its supply chain as it builds out its omnichannel network and adding new facilities in key geographies.

“With these changes, Ahold Delhaize USA will have full control of its supply chain and an optimized network at scale, which enables the local brands to better serve their customers, allows ADUSA to continue to invest in automation and digital capabilities to lower costs to serve, and ultimately enables direct to customer relationships as part of its omnichannel network,” Ahold Delhaize USA CEO Kevin Holt said. “The transformation will create one of the largest supply chain networks on the East Coast. It is scheduled to be finished in April 2024, with 26 facilities in the integrated self-distribution network.”

First-of-a-kind customer ecosystem
Ahold Delhaize said that the strong local presence of its brands is a key factor in their success, and pointed to the New York metro area, where Stop & Shop and Fresh Direct and their partners form an ecosystem to deliver fresh and healthy food wherever, however and whenever New Yorkers wish to shop, as an example.

In the Benelux countries, Ahold Delhaize has a unique position with the Albert Heijn and Delhaize supermarket brands, the online marketplace bol.com as well as Gall & Gall and Etos. Ahold Delhaize said it is creating a first-of-a-kind customer ecosystem in which the Benelux brands will work closely together to connect shopping experiences across food and non-food, offering customers more convenience, value and relevance.

“Time is a precious commodity for our customers,” said Wouter Kolk, CEO of Ahold Delhaize Europe & Indonesia. “Retailers who can simplify the customer journey will be most relevant in the long term, and powered by bol.com we believe we can be one of them. With the combined strengths of all the brands in the Benelux, we have a one-of-a-kind opportunity to create a truly comprehensive customer ecosystem.”

Explore subsidiary IPO of bol.com

After an extensive and thorough review considering the strategic opportunities for bol.com, during the past year, Ahold Delhaize has decided to build on the remarkable success, customer loyalty and leadership position of bol.com as a retail tech platform and explore a subsidiary Initial Public Offering (sub-IPO) for bol.com.

The rationale for this decision is to fully activate the opportunities for bol.com, to fuel its tremendous growth potential and to provide further funding for Ahold Delhaize to execute on its winning strategy. Bol.com will continue to play an important role in the strategic partnership with other brands of Ahold Delhaize in the Benelux.

It is envisaged that the sub-IPO will entail a listing of a limited interest on Euronext Amsterdam, and that Ahold Delhaize will retain significant control over bol.com in the long term to ensure its growth and development.

The sub-IPO is expected to happen in the second half of 2022, subject to multiple internal and external factors, including market conditions, the company said.

Increasing focus on health and sustainability

Ahold Delhaize said it will also further invest in, sharpen and strengthen its initiatives towards a healthy and sustainable food retail system. Amongst other sharpened ambitions, the company is bringing forward its scope 1 and 2 targets by committing to reach net-zero carbon emissions across its own operations no later than 2040 and to becoming a net-zero business across its entire supply chain, products and services by 2050 (scope 3).

Further, Ahold Delhaize has joined the Business Ambition for 1.5°C, a global coalition of UN agencies, business and industry leaders, in partnership with the Science Based Targets initiative (SBTi) and the UN led campaign ‘Race to Zero’. These and other ESG metrics will make up a bigger part of executive incentive programs going forward and will be supported by increased transparency going forward.

“We realize that these are ambitious targets which require a lot of work over the coming years, and we feel encouraged by our double AA rating upgrade by MSCI and recently confirmed DJSI leadership position,” Muller said. “But most importantly we are confident that these and the other targets included in today’s strategy update are achievable because of our highly engaged and committed associates.”

 


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