Ahold Delhaize aims to become industry-leading local omnichannel retailer

Harriet Cohen
Senior Retail Analyst
@RetailAnalysis

Date : 09 November 2020

As part of its Q3 results announcement, Ahold Delhaize set out how it was aiming to solidify its position as an industry-leading local omnichannel retailer in 2021 and beyond. We look at the three strategies it is putting in place and the initiatives it has implemented as it looks to build towards this future now.

1. Step-up online capacity, supply chain and technological capabilities

After reporting online sales growth of 126.8% and 114.7% in the US, in Q2 and Q3 respectively, and 45.8% and 37.8% in Europe, in the same timeframes, Ahold Delhaize has set out how it wants to build on these foundations for future growth. At the end of Q3 it said its US businesses reached ‘approximately 90% of households in [their] markets with home delivery and Click & Collect, and around 70% with same-day options’.

To continue to benefit from growing shopper interest in online, the retailer said it was aiming to ‘increase [its] online capacity by nearly 100% in the US and nearly 50% in Europe’. This will be driven by ‘an expansion to nearly 1,400 Click & Collect locations in the US by 2021, doubling the locations since the beginning of 2020’. Meanwhile in the Netherlands and Belgium, this will be ‘inclusive of an over 50% increase in capacity at bol.com in 2020 and 2021’.

To improve the efficiency of its in-store operations in Europe, the retailer will increase electronic shelf labelling options. The technology ‘will be implemented at more than 50% of [its] European grocery stores in 2021, doubling the number from 2020, [with] nearly all Albert Heijn and Delhaize [company]-owned stores [using] electronic shelf labelling by year-end 2020’.

2. Advance omnichannel offerings

Aided by its strong online growth and in conjunction with its growing digital capabilities, Ahold Delhaize is also looking to advance the range and breadth of its omnichannel offerings globally. In the US, this is seeing it focus on ‘enhancing subscription offerings’. This will see it test a new subscription offer in Q1 2021, which will cost less than US$100 annually. This will provide shoppers will an ‘improved value proposition and preferential delivery time slots’, as it aims to drive increased loyalty and engagement.

In the US, the retailer will partner with Mirakl, which itself recently signed a similar agreement with Kroger, which will enable it to provide an ‘endless aisle’ for its shoppers, providing them with access to between 80,000 and 100,000 products. Mirakl provides a third-party platform, to which Ahold Delhaize’s US-based brands will connect as a way to encourage them to visit stores, as part of a click and collect solution.

Elsewhere, online will play a growing part of operations internationally. In Belgium, its Albert Heijn brand launched a home delivery service in the Antwerp region, adding to its range of fulfilment options for shoppers. In the Netherlands, Albert Heijn launched a new no delivery fee solution for smaller households, which it said would be expanded in 2021. In Romania, its Mega Image banner launched a 90-minute delivery solution, expanding its range of shopper-focused solutions.

In relation to its stores, Ahold Delhaize will accelerate the remodelling programme at its Stop & Shop banner in the US, with about 60 planned for 2021, after 31 are expected to be completed in 2020. Meanwhile, in the Netherlands, Albert Heijn will remodel a further 170 stores to its new fresh and technology-focused format, after updating over 200 so far.

3. ESG Action items

Ahold Delhaize and its brands have a long-standing commitment to improving the shoppers’ choices, making products healthier or offering healthy alternatives. In the future it is looking to enhance its private label offer to provide a strong value proposition and with 51% of its sales to come from healthy products by 2022. To support shoppers it is also ‘increasing discounts and rewards on healthier products, using nutritional guidance systems like Nutriscore and Guiding Stars, and will implement… nutritional labelling across [its] portfolio by the end of 2025’.

Elsewhere it has also committed, in partnership with suppliers, to halve its food waste by 2030 as a member of the 10x20x30 initiative, while also focusing on working toward zero plastic waste from its private label ranges by 2025, amongst other initiatives.