Ahold Divulges Growth Strategy

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November 29, 2011

Dutch retailer Royal Ahold has unveiled a six-point strategic growth plan that includes increasing store brands penetration to 40 percent in the United States.

Ahold’s senior management presented an update of its strategy to analysts and investors at its European headquarters in Zaandam, the Netherlands. “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,” said Ahold’s CEO Dick Boer.

One portion of Ahold’s new growth strategy focuses on private label and is meant to grow the retailers competitive advantage by increasing private label as a percent of total store sales in the U.S. “We have a competitive advantage in a number of areas, including own brand products, customer loyalty and format development. By leveraging these skills across the group and applying the Ahold Retail Model, we can further simplify our business, drive sales and reduce cost,” Boer told analysts.

In addition to growing private label in the U.S., Ahold plans to:

• Launch new customer loyalty initiatives intended to add 1 to 2 percent to same-store sales growth;
• Triple online sales to $2 billion by 2016;
• Open a minimum of 150 new convenience stores in Europe and a minimum of 50 supermarkets in Belgium in the next five years;
• Leverage global capabilities based on the Ahold Retail Model; and
• Cut costs by $467 million over the next three years.

In June, Boer said demand for the retailer’s store brands was expected to remain essentially flat for the foreseeable future, but noted the company planned to expand its private label offerings and develop more U.S. store formats.

Recently, Ahold debuted a 72,000-square-foot Stop & Shop format with an emphasis on 4,000 store brands products in addition to an in-store nutritionist, a supervised child play area, curbside pick-up and innovative in-store shopping tools.

In the U.S., Ahold owns and operates Stop & Shop, Giant Foods, Martin’s and Peapod.

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