Observers Reflect on the Changing of the Guard at Ahold Delhaize

Ahold Delhaize’s incoming CEO is regarded as a more outgoing and adventuresome leader than the colleague he will succeed, and is expected to push for more aggressive growth in the U.S., sources say.

Frans Muller, who has served as deputy CEO for the Dutch-based retailer since coming over in Ahold’s acquisition of Delhaize in 2016, will take over for CEO Dick Boer, effective July 1, as Boer begins a transition to retirement.

Muller will inherit a company in strong financial shape and with sales momentum at U.S. banners created through a combination of Boer’s disciplined leadership and the financial benefits of the merger—an event several sources said might not have happened when it did were it not for Muller’s influence as CEO of Delhaize. With the integration largely complete and spinning off millions in synergy savings, Muller has the opportunity now to further ratchet up growth in the U.S. and address legacy issues including distribution, warehousing and e-commerce.

“He’s the perfect person at the perfect time,” Burt P. Flickinger III, managing director of Strategic Resource Group, told WGB in an interview.

Legacy Ahold USA brands such as Stop & Shop and Giant-Landover, while doing formidable sales volume, have generally trailed revenue growth and, arguably, the creativity exhibited by faster growing Delhaize siblings Hannaford and Food Lion, Flickinger noted.

Related:Muller to Succeed Boer as CEO of Ahold Delhaize

The move adds another former Delhaize executive in an influential position at the merged company as Muller joins U.S. CEO Kevin Holt and JJ Fleeman, the newly named leader of the Peapod Digital Labs e-commerce unit. Peapod, the longtime e-commerce arm of Ahold, has been under siege amid the rise of competitors getting into the digital grocery space, Flickinger said. Muller also has the opportunity to address what Flickinger called a “half-nelson” on big brands such as Stop & Shop that have outsourced warehousing and distribution, while Hannaford and Food Lion still self-distribute.

“Dick Boer deserves a ton of credit for getting Ahold USA from a position where it was underperforming financially 15 years ago, and they did a better job than anyone in capitalizing on the conversion of former A&P, Pathmark and Waldbaum's stores sold in the A&P auction,” Flickinger said. “The unfinished piece of business is Peapod, along with warehousing and distribution.”

Though just four years younger than his predecessor, the 56-year-old Muller cuts a more youthful profile than Boer and tends to be more of a “people person” vs. the traditional, top-down manager that Boer tended to resemble, sources said.

Related:Kevin Holt to Lead Ahold Delhaize USA as CEO

“Frans Muller is a connector, someone who builds bridges. He talks with people in all ranks and all positions in his company, he even chats with the cleaning lady,” said Jorg Snoek, founder of the Belgian-based industry trade RetailDetail, relating his experience following Muller at Delhaize there. “It’s unbelievable, I’ve seen him chat randomly with people and even though within such a huge company, he couldn’t possibly have known who he was talking to, he manages to ask the right questions.

“He does this out of genuine concern,” Snoek said. “He really wants to know everything that’s going on, he wants to know what’s happening in the stores, who his people and his clients are. He’s a listener.”

At the same time, Muller “won’t spare the rod,” Snoek added, referencing an unpopular downsizing in Belgium that helped the retailer compete more effectively with leaner competitors.

About 61% of Ahold Delhaize sales originate in the U.S., and perhaps an even greater percentage of its opportunities, Snoek said.

“I’m quite sure Muller will put a heavy focus on the U.S. It makes a lot of sense to expand in the U.S., as the merger allows for a better position and new growth opportunities. … As such I’m convinced Kevin Holt’s position will become increasingly important,” he said. “Muller always wants to be the No. 1 or 2 in every market, in every U.S. state Ahold Delhaize is in as well, so states where they’re in third position or worse, things are bound to happen. Either he’ll sell off or there’ll be mergers and acquisitions. We can definitely expect some acquisitions.”

Some sources said they felt that Boer, who took Ahold’s CEO chair in 2008—just five years after an accounting scandal nearly sunk the company—tended not to want to appear overambitious. They said Muller was the driving force in bringing together Ahold and Delhaize after many years of speculation they would make a match.

Muller won’t necessarily have the same perspective and could as a result push for a more dramatic transformation to steel the U.S. business for a competitive future. Mike Dawson, a columnist with the German trade Lebensmittel Zeitung, told WGB he felt a merger with a U.S. giant like Kroger would be a better possibility with Muller at the helm.

Muller would be “far more open than Dick Boer for an agreement with Kroger because his mind is more flexible,” Dawson said. “Most commentators say that Muller is likely to continue the status quo at Ahold, but I disagree. I think that he will make some major moves as soon as he feels he has a clear mandate and power to act.”