Ahold Adds ‘Promises’ to Strategy

PHILADELPHIA — Ahold will accelerate its investment in online shopping and has added “three promises” to its “six pillars” growth strategy, officials at the retailer’s annual Capital Markets Days here said last week.

The retailer, which operates the Stop & Shop, Giant-Landover and Giant-Carlisle chains and the Peapod Internet shopping platform, also said it would also step up an existing cost savings program as it fights improve efficiency amid above-average — but declining — gross margins.

Dick Boer

, Ahold’s chief executive officer, described the growth of online shopping as “the biggest shift” in a retail food landscape that was changing faster than ever. The new investment will support further evolution of the consumer-focused growth strategy Boer unveiled at the same event a year ago in the Netherlands.

“People want to shop online, and more and more are selecting the products in the store and shopping online for them. That dramatic shift brings us clearly to a new era, and a big change in our industry. And we are ready for that,” Boer said.

Ahold this year acquired the Netherlands-based Internet shopping site bol.com, and expanded Peapod’s capabilities in the U.S. through the introduction of scannable billboards allowing commuters to shop via smartphone as they commute. Boer said those efforts, as well as drive-up order pickups at stores, would continue as elements of Ahold’s growth plan.

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That plan, built upon what Boer calls “six pillars” to create and enable growth, were joined last week by “three promises” around which Ahold would focus its efforts: being a better place to shop, being a better place to work, and being a better neighbor.

“These promises are may be simple, but they should be simple so we can use them for all of our stores. They are simple words, but they are so important, because if we can deliver on these words in our stores that will make us very successful,” Boer said.

Growth Strategy

“If our employees are not proud of what they do, and take pride in what they do, you will certainly feel that when you shop in the store,” he said. “So a better place to work is as important as a better place to shop.”

Boer emphasized that the growth strategy outlined a year ago was succeeding, highlighting market share gains, sales growth and profits that were outperforming the market. But, he acknowledged that performance came amid difficult times for shoppers on both sides of the Atlantic.

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Jeff Carr, Ahold’s chief financial officer, in a separate presentation said the company would fund growth with additional cost reductions, increasing a three-year plan to cut expenses from 350 million euros to 600 million euros by 2015. Carr said ample opportunity existed for cost reductions including new efforts to promote more efficiently and drive penny profits on private-brand items by addressing packaging inefficiencies.