CZECH: Ahold to "renew" Czech store network

By Michelle Russell | 29 November 2012

Ahold has said it continues to see growth opportunities in the Netherlands and will look to further expand in Belgium and the Czech Republic

Ahold has said it continues to see growth opportunities in the Netherlands and will look to further expand in Belgium and the Czech Republic

Dutch retailer Ahold said it has "strong" plans to increase profits and expand its store network in the Czech Republic.

Speaking on the second day of the firm's Capital Markets Day in Philadelphia in the US, Sander van der Laan, COO of Ahold's European operations, said the retailer is "one of the major players" in the Czech Republic with a number two position. It currently holds a 16.9% share of the market behind Tesco with a 20.6% share.

However, earlier this month, Ahold reported its combined net sales in the Czech Republic and Slovakia fell 3.6% in the year to the end of September. Identical-store sales dropped 1.8%. Rival retailers opening new stores has affected Ahold's market share in the Czech Republic said.

In 2011, Ahold increased sales in the two markets by 4.8% or 2.2% when looking at identical-store sales.

Van der Laan conceded the traditional hypermarket format was under "severe pressure" in the Czech market with the share of 6,000 sq m stores having dropped in the last year but said Ahold was "well-positioned" to deliver a sustainable operating model in such a competitive environment.

Ahold operates 227 supermarkets and 55 compact hypermarkets in the country. Van der Laan said the group has "strong plans" to grow profit in this market, in addition to reducing costs and "investing in customer programmes to improve quality and freshness, creating new ranges and strengthening our price positioning".

He said: "We will renew our entire network in next few years ... and continue to open new stores."

Outlining the group's strategy for Europe as a whole, van der Laan said the group continues to see opportunities for growth.

In particular, he said Ahold is making "very good progress" with the expansion of its Albert Heijn store network in Flanders in northern Belgium.

Van der Laan said Ahold's entry into Belgium where it has opened ten stores to date, is "doing well". He added: "We can really leverage most of the things we have into that country. "We want to double our store count in 2013, we are well on track to open 50 stores by 2016, which really creates a significant business," he told analysts. "We strongly believe in this market for us and the opportunity to leverage what we have in the Netherlands."

On its business in the Netherlands, van der Laan said Ahold would like to push its fresh food further, set up a loyalty scheme and revamp its own-label range.

He said: "We continue to develop new initiatives to strengthen our value proposition. We continue to develop new innovative products, we are are investing in the development of a loyalty programme and we are renewing and continue to develop our own label range.

"We do believe when you look at our brand and our format, it is very well-positioned. We are renowned for quality ... we have a very good fresh offering, which we are going to improve and refresh going forward and we have a good own label offering. We believe both our brands and format is very very well positioned to compete with other players in the Dutch retail market."

On the first of the investor days, CEO Dick Boer outlined plans for Ahold to step up its moves to cut costs in a bid to fuel further investment in the business.

The CEO said it will up its cost savings from EUR350m (US$454.7m) to EUR600m by looking at sourcing and promotional expenditures. The retailer said the move would help it provide a "better offering and value" for its customers.

Sectors: Emerging markets, Financials, Retail

Companies: Ahold, Tesco

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