US suppliers will use promotions to boost sales, said Stop & Shop owner Ahold

US suppliers will use promotions to boost sales, said Stop & Shop owner Ahold

Ahold, the Dutch retailer behind US retail chains including Giant Food and Stop & Shop, believes food makers in the country will up their spending on promotions to revitalise sales.

Sales in some US food categories have slowed - and in other areas fallen - in recent months after manufacturers moved to increase prices to offset commodity costs.

Speaking after Ahold announced its 2011 results, CEO Dick Boer told just-food he expected suppliers in the US to spend more money on discounts to boost sales.

"They of course priced in last year a lot of their inflation in the US - we all know that US inflation was higher than Europe," Boer said. "What I think they will do is spend more on promotion to drive sales in our stores. In a way, for us that's good news, we're well positioned. We're still proven over the last years that we could be very competitive in these markets so we expect also to benefit from it."

The Ahold chief said the retailer would continue to focus on its promotional strategy, with consumers looking for value and competition remaining "intense". Private label, he said, would also be an "important driver". Own-label lines increased their share of Ahold's total sales in the US last year.

He said: "You of course continue to focus on your promotion activities because we are already in most of our markets very well positioned with our promotions. The value tier [of private label], which is Euroshopper in the Netherlands and Guaranteed Value in the US, is an important driver for showing customers you offer a good alternative. It's really giving the message on price continuously to customers. That's the most important thing we can do now."

Boer said Ahold had "outperformed most of our peers" in the US in 2011, as well as expanding its presence in the country and increasing market share. In the early weeks of 2012, however, he said Ahold had seen "slower growth" in its markets. In the US, he cautioned fuel prices could weigh on consumer spending. "Fuel always has a big impact in their spending. It's an all-time high price," he said.

In the early weeks of the year, Ahold has already further increased its store network in the US with the acquisition of 16 Genuardi's stores from Safeway Inc. Boer said he preferred to buy businesses that way in the US. "Last year in the US, you saw pockets of stores coming on the market. We believe that is still the best way to do acquisitions. On one hand, it's taking out stores and in some other areas we can convert them to our brands. That will continue to happen in all markets in Europe and in the US," he said.

Boer said Ahold planned to open ten more stores in Belgium in 2012 to add to its first two outlets in the country, which opened last year. He added Ahold was "on track" to open its first convenience store in Germany this year.