AMSTERDAM - Private label and the expansion of general merchandise offerings are key elements of Ahold's strategy to improve its retail business, the company's president and chief executive officer said at the annual shareholders' meeting here last week.
Anders Moberg, who became CEO in 2003 following the company's $1 billion-plus accounting scandal, also said Ahold has more work to do in simplifying its operations and driving sales growth through a value proposition, particularly at Stop & Shop and Giant-Landover, where the integration of the two chains has "taken more time and resources than expected."
"In the Stop & Shop/Giant-Landover arena, as in all our retail businesses, we need to accelerate growth," he said. "The competitive environment is changing faster than we - and others in our industry - had expected. Speed is of the essence."
The company recently promoted Dick Boer, who heads the company's Albert Hein chain in the Netherlands, to lead a "retail review team" charged with evaluating Ahold's current retail businesses and suggesting ways to hasten performance improvements.
"We must find ways to increase the pace of implementing our strategic plans without sacrificing the quality of execution," Moberg said. "This is a critical and top priority."
Stressing the need to provide value and differentiation, Moberg said the company's Giant-Carlisle banner is an example of the company's success in those areas.
He also said private label "will become more and more important across our businesses," citing the success of the company's Nature's Promise health-oriented brand in the U.S. and its Gott liv, or Good Life, brand in Sweden.
Moberg reiterated the company's goal to increase the penetration of general merchandise in the company's stores, saying he hoped to potentially double sales levels by 2010 if early efforts to expand these product offerings prove successful.
"Our first step will be to roll out a new line of general merchandise and create a more integrated approach within our existing nonfood business," he said.
A spokesman for Ahold told SN after the meeting that Moberg previously has stated a goal of improving general merchandise as a percent of sales from 5% to 10%-11% within the next few years, although the spokesman declined to elaborate on what specific products would be added to the mix.
In 2003, shortly after he was installed as CEO, Moberg had said he wanted to achieve 5% growth in overall sales and earnings per year and trim $700 million in costs.
"We have given an outlook for 2006 that falls short of the original targets we set in 2003," he said. "But let me be clear, these original targets remain unchanged. I believe we can - and need - to achieve them to continue to be competitive and successful. This remains our focus and our goal."
