Ahold Delhaize provides update on combined strategy

Ahold Delhaize laid out ways in which the new company will be greater than the sum of its parts in a strategy called “Better Together” at its Capital Markets Day in London Wednesday.

“[Better Together] refers to our new group. It refers to a merger of two complementary companies. It refers to two large businesses, with a presence on both sides of the ocean. But also Better Together means in this case to actively share best practices, to learn from each other, and to realize our benefits of scale,” said CEO Dick Boer.

The tagline for the strategy is “Together, we build Great Local Brands, bringing Fresh Inspiration Every Day.” Executives outlined ways that banners in the U.S. and Europe could learn from each other, including in the areas of private label, small formats, competition from discounters and e-commerce.

Boer noted that U.S. banners have long held their own against the world’s largest discounter — Walmart — while Netherlands-based Albert Heijn has gone from less than 10% of its stores using a discount model to 20% while growing market share from 24% to 35%.

“So are we not able to defend and to grow in markets where discount is coming?” said Boer. “I hope you are convinced we can. We are able, with the scale and the skillset we have around the world, to make that work.”

In small formats — another strength in European markets — Boer noted Hannaford is testing a 20,000-square-foot store, while bfresh provides another model in Massachusetts.

“So how to create also the excitement in the U.S. with smaller stores is still something we’re working on, but we still believe these are our areas of new growth and new opportunities in a changing environment of our customer, where the demand is more convenience,” he said.

Internally, Ahold Delhaize has begun making changes to its structure to realize efficiencies. The retailer is planning a joint retail business services organization for Ahold USA and Delhaize America that was announced to employees this week and will be in place by Jan. 1, 2017. The new legal entity will combine aspects of finance, HR, legal, IT, supply chain, retail operations support and own brands.

The company said it is on track to achieve the expected 500 million euros in synergies throughout its business, with 65% to 70% of that coming in the U.S.

Also in the U.S., Ahold Delhaize has begun the process of negotiating with vendors, with 35% of national brand deals closed so far and a completion target for all national brand deals of 1Q 2017, said Frans Muller, deputy CEO and chief integration officer. Negotiations will include 240 national-brand suppliers, 30 fresh suppliers and 130 own brand suppliers.