Most supermarket companies want their customers to return early and often.
Ahold is trying to make sure they never leave.
The Netherlands-based global retailer has recently diversified its U.S. business activities so that the company is constantly intersecting with its consumers at multiple points of contact.
Customers can shop Ahold's U.S. supermarkets and other food retail formats, order food on-line through its Peapod business, and eat meals in restaurants served by its recently acquired U.S. Foodservice operation.
"And it's all the same customer," stressed Bob Tobin, chairman of Ahold USA, in an interview with SN (see story that begins on Page 1). "We're not terribly selfish, but we want the opportunity to be involved in every meal occasion."
The early results are positive. U.S. Foodservice is already making a mark in Ahold's retail operation by supplying meals to the new freshgo retail format of Ahold's Giant Food unit. And U.S. Foodservice is gearing up for a broader arrangement with Giant's conventional supermarkets. Those are all extracurricular activities because U.S. Foodservice's main business is to supply restaurants and other institutions, capturing away-from-home meal occasions for Ahold.
In the on-line shopping arena Ahold has reason to believe its efforts may be more successful than many initiatives elsewhere in the industry. Ahold showed its commitment to this activity when it became majority owner of Internet grocer Peapod last year. Moreover, Ahold isn't a neophyte in this business. It is already breaking even with home shopping in the Netherlands and is close to doing that in Argentina. That said, no one is discounting the huge challenges for any operator venturing into home shopping in multiple markets. The combination of Ahold's bricks and Peapod's clicks bears watching as a harbinger of where on-line shopping is headed in this country. Look for Ahold to fine-tune its home-shopping programs with its Giant Food and Stop & Shop chains before a wider rollout in the United States, with ramifications for its worldwide business.
What will be the long-term benefit of these moves to Ahold? Cees van der Hoeven, Ahold's president and CEO, believes his company's philosophy of operating in multiple channels and markets with numerous formats and brands will ensure its continued growth. What's more, he warns of a growing chasm between the strong and weak food retail operators, and he puts Ahold squarely in the strong category. He laments that the financial investment community looks at food retailing as a sector rather than rewarding the best companies. But that would likely turn around in time if Ahold's strategies bear fruit.
The overall lesson here is that Ahold realized it had to do something different to grow in the U.S. food arena. The supermarket pie isn't expanding and government restrictions are making it harder for operators to buy other chains. So Ahold went for the complementary businesses of food service and opted to press ahead in home shopping.
The industry dynamics that drove Ahold's strategy will no doubt lead other large U.S. supermarkets to create their own paths to additional growth. And for many, sooner will be better than later.
