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November 22, 2011

NETHERLANDS: Ahold must adapt to consumer habits – CEO Boer

Changes to the way consumers shop are behind the new strategy drawn up at Ahold, the Dutch retailer's chief executive Dick Boer has said.

By Dean Best

Changes to the way consumers shop are behind the new strategy drawn up at Ahold, the Dutch retailer’s chief executive Dick Boer has said.

Ahold, which owns the Albert Heijn store network in the Netherlands and US chains including Stop & Shop and Giant Carlisle, yesterday (21 November) outlined ambitions that included a plan to treble its online sales.

The retailer also said it would introduce new customer loyalty schemes to increase identical-store sales, as well as open a minimum of 150 convenience stores in Europe and at least 50 supermarkets in Belgium in the next five years.

Boer declined to put a specific figure on how much Ahold was spending on implementing the new strategy. However, he said the retailer’s capital expenditure would remain at 3-3.5% of annual revenues.

The Ahold chief also said the retailer, despite the hope that the initiatives would boost sales, was sticking to its long-term target of increasing net sales by 5%.

Boer said Ahold had to react to the new ways in which consumers were behaving. “The consumer is changing rapidly in the way it is shopping. We are really changing to follow the consumer’s changing habits. People will shop everywhere, in every place and at every moment,” he said.

Ahold plans to take its EUR500m (US$675.9m) of online sales to EUR1.5bn by 2016. Boer said the retailer would open more fulfilment centres in the Netherlands as it built its online business and would start testing pick-up points in the country and in the US to allow consumers to order online and collect their shopping from specific locations. The Ahold chief believe a greater proportion of the retailer’s online sales would come from pick-up points rather than home delivery, which, he said was a more expensive option for shoppers.

Ahold also wanted to change the way it rewarded consumers, Boer said. The retailer is lining up new customer loyalty schemes that it says will add 1-2% to its identical sales growth and hinted at plans to introduce more personalised offers.

On the store expansion plans, Boer said ten of the 50 planned outlets in Belgium would be open in the next year. He was coy about the specific numbers of outlets that would open in each market, although he said the retailer’s ambitions in Germany, where it plans to open its first convenience store next year, was “limited” to the west of the country.

Asked about Ahold’s acquisition plans, Boer said the retailer would still look to expand its business through M&A. “The longer the crisis takes, the more opportunities will arise,” he said, although he noted that, particularly in the US, it “takes a long time before retailers give up”.

In the US, Ahold is hoping for own label to account for 40% of sales. “We clearly feel there’s a lot of opportunity to grow our private label,” Boer told just-food.

The retailer’s new strategy, meanwhile, also included plans to reduce costs by a further EUR350m. Ahold plans to save money improving its supply chain and standardising systems, Boer said. 

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