Ahold Delhaize is prospering in a fast-changing grocery arena by blending the right mix of local appeal, personalization and innovation into its shopping experiences, chief executive officer Dick Boer said at the global supermarket retailer’s annual general meeting.
“Some people say that they do not see a future for physical stores. I totally disagree with this. Because stores still matter, and that will be the case in the future, too,” Boer told shareholders Wednesday at the company’s headquarters in Zaandam, the Netherlands. “The more virtual the world becomes, the more need there is for the real world.”
Boer (left) described people as “social animals” who like to meet with others and “touch, feel and smell new and fresh products.” That means supermarket operators like Ahold Delhaize — whose U.S. operations include Stop & Shop, Giant, Martin’s Food Market, Food Lion and Hannaford chains plus the Peapod online grocery delivery service — must continually evolve their stores to engage with customers and their communities.
“Today, supermarkets do a lot more than sell coffee and peas. While many [other kinds of] stores are closing down, supermarkets are being transformed into social meeting places — into neighborhood centers, bringing people of all ages together,” Boer said.
One area that’s top of mind with consumers is health and wellness. On that front, the retailer has sharpened its expertise in fresh food and served up a wider array of better-for-you, sustainably produced products, according to Boer.
“Customers who are seeking a healthy lifestyle will find more information and a wider choice — not just with our own-brand lines, such as Nature's Promise in the U.S., but also with advice that makes it easy for customers to make healthy choices,” he explained.
“These initiatives make an important contribution to our ambitious goals in the area of health,” Boer noted. “By 2020, we intend to have 50% of our own-brand sales coming from healthier products. We are the only retailer that dares to set a hard target of this kind. We are also making our existing own brands healthier. For example, Stop & Shop, Giant/Martin's and Peapod reduced the sugar content in their own-brand products by almost 1 million pounds last year.”
In catering to customers’ needs, personalization is paramount across brick-and-mortar and digital channels, Boer said. To that end, discounts and special offers must be relevant and as personal as possible.
“Everything in retail depends on this,” he told shareholders. “Customers need to be able to decide for themselves when and where they go shopping, whether we are talking about pickup points, home delivery or shopping in the store.”
Personalization has helped spur growth in Ahold Delhaize’s online platforms, which saw sales rise more than 20% in 2017 to €2.8 billion ($3.46 billion), of which €1.2 billion ($1.48 billion) came from online food sales. By 2020, the company expects to generate nearly €5 billion ($6.18 billion) in online sales, Boer reported.
Customer loyalty programs, too, are key to the personalization equation, he said, citing the Albert Heijn Bonus Card and Food Lion's Shop & Earn program, in which customers can earn money back, approximately $20 per month.
“Last year, our brands sent out no less than 2.5 billion personal offers worldwide,” Boer said. “Meanwhile, we continue to invest in personalizing the shopping experience even further — in extra capacity for online platforms like Peapod, bol.com and ah.nl; in the click-and-collect service of Stop & Shop supported by Peapod; and the new pickup points for Hannaford To Go.”
And enabling it all is technology, with the end goal of making shopping simpler, faster and easier for customers, according to Boer.
For example, he said, the Albert Heijn chain this summer plans to open its first location with "tap to go" technology in Amsterdam, with 80 more to follow across the Netherlands. And in the United States, Stop & Shop is experimenting with checkout-free shopping.
“Using technology, we can make the customer experience even better and more personal, improve our stores and upgrade digital channels. With technology, we can also make our supply chains more sustainable and more transparent,” Boer said. “This not only gives us a better and more up-to-date view of the production process for our products, it also increases reliability and visibility for customers, using blockchain or other innovative technologies.”
At the meeting, Boer also thanked deputy CEO and chief integration officer Frans Muller, who is slated to succeed him as CEO on July 1. “I am very confident that Frans, together with my colleagues in the executive committee, will help Ahold Delhaize flourish in this next phase,” Boer said.