ZAANDAM, NETHERLANDS - Following the release of its third quarter financial results showing strong forward momentum, Ahold Delhaize has hit the newswires once again to unveil the next phase of its ambitious Leading Together strategy. The next chapter of this ongoing strategy outlines key plans and targets for 2025 and includes accelerating sales growth, doubling down on digital customer relationships, and creating one of the largest supply chains on the East Coast of the United States.
“Our Leading Together strategy has proven to be strong in recent years and is a great foundation as we head into the future,” stated Frans Muller, President and Chief Executive Officer. “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.”
In this new phase of its Leading Together strategy, the company has identified four priorities to double down on between now and 2025. According to a press release, they include:
- Serving customers through deeper digital relationships across its omnichannel Customer Value Proposition (CVP)
- Accelerating development of/investments in omnichannel capabilities
- Leading the transformation into a healthy and sustainable food retail system
- Leveraging its portfolio to create the ultimate ecosystem for smarter local customer journeys
To bolster its omnichannel presence, Ahold will invest in its brands and provide shoppers with the relevant products, service, promotions, experiences, and premium subscription memberships that they have sought in the past. Ahold also revealed that it will accelerate its investments in building scalable and repeatable operational capabilities, with a focus on digital, online, data, and automation.
In making these key investments, the company expects to accelerate net sales growth with €10 billion ($11.4 billion) in incremental sales from 2023–2025. Net consumer online sales are also planned to double between 2021 and 2025.
“To support these plans, the company will increase investment levels from 3 percent to 3.5 percent per annum to fuel growth,” explained Natalie Knight, Chief Financial Officer. “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: ~€4 billion ($4.5B USD) 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 ($1.1B USD) billion share buyback for 2022.”
In addition to growing its omnichannel platform, Ahold announced that it is looking to establish one of the largest supply chain networks on the East Coast of the U.S. In 2019, the retailer’s U.S. arm launched its supply chain transformation, focused on bringing back its supply chain as it builds out its network and added new facilities in pivotal geographies.
Now, Ahold plans to accelerate this mission, further optimizing its supply chain capabilities on the East Coast.
“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,” Kevin Holt, Chief Executive Officer, Ahold Delhaize USA 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.”
The retailer is also looking to create a first-of-its-kind customer ecosystem as it expands its Leading Together strategy. This will focus on Ahold’s supermarket brands Albert Heijen and Delhaize, online marketplace bol.com, as well as Gall & Gall and Etos in the Benelux.
The Benelux brands will work closely together to connect shopping experiences across food and non-food, offering customers more convenience, value, and relevance. Ahold will also explore a subsidiary Initial Public Offering (sub-IPO) for bol.com to accelerate its growth potential.
“Time is a precious commodity for our customers. 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,” said Wouter Kolk, Chief Executive Officer of Ahold Delhaize Europe and Indonesia.
Rounding out this strategy, Ahold will invest in, sharpen, and strengthen its healthy and sustainable food retail system goals. Among these ambitions is the retailer’s mission to reach net-zero carbon emissions across its own operations no later than 2040, and become a net-zero business across its entire supply chain, products, and services by 2050.
Ahold has also 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.
“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,” commented Muller. “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.”
To read the report on these critical investments in its entirety, click here.
A webcast of the company’s Investor Day presentations will also be available on the company’s website with further insights.
As Ahold carries out these new initiatives, AndNowUKnow will report.
