Becoming a successful omnichannel grocery retailer goes well beyond enabling customers to order online and have their purchases available for pickup or delivery, according to Kevin Holt, CEO of Ahold Delhaize USA.
In a session yesterday during Western Michigan University’s virtual Food Marketing Conference, Holt said Ahold Delhaize USA is undergoing a companywide transformation designed not just to be able to serve customers when, where and how they want through multiple channels, but also to meet their specific needs, earn their trust and loyalty, and help them improve their well-being.
In fact, the food retailer has boiled down its mission to one line, to provide “uniquely local brand solutions to make customers’ everyday lives a bit easier so they can enjoy the moments that matter.”
The U.S. arm of Netherlands-based Ahold Delhaize, the company operates the Stop & Shop, Giant Food, Giant/Martin’s, Food Lion and Hannaford supermarket chains along the East Coast plus subsidiaries Peapod Digital Labs (e-commerce and digital solutions) and Retail Business Services (business support).
“What we ultimately came up with was this idea of a ‘connected customer.’ And the connected customer for us, really, is uniquely local brand solutions to make customers’ everyday lives a bit easier so they can enjoy the moments that matter. We believe this is what guides us,” Holt said in the videoconference. “While each of our brands may use different attributes or a different way in terms of how they’re doing it, everyone is guided by this as we move to the future. We believe that this is what consumers will be looking for in the future. Those who can make these connections, offer personalized solutions and deliver on what customers’ needs are will be successful. And we’re looking holistically, both online and in-store, because we believe that both, fully integrated, will be extremely important.”
Core components of Ahold Delhaize USA’s strategy include personalization, a fully integrated omnichannel experience, local and trust, health and wellness, and private brands.
Holt noted that consumers want personalized discounts and deals that are relevant and meaningful.
“Now, 71% of our consumers feel frustrated when the shopping experience is impersonal, and customers are really demanding personalization in their shopping experience. We’re also seeing that many customers want to see recommendations come to them — ‘So if I like this, what else would you recommend?’ And for many of you who have been out looking at commerce sites and so on, being able to navigate and finding inspiration and recommendations isn’t always easy,” he explained. “So getting better and better at doing that and understanding your customer is very important for what we’re trying to do.”
Fifty-six percent of online shoppers are more likely to return to a website that recommends products to them, and 46% of Ahold Delhaize USA’s customers said they would like to receive more personalized experiences, Holt reported.
“So needless to say, there’s a lot of opportunity in this. At our ADUSA operations last year, we delivered over 9.8 billion personalized offers to consumers. Because of these personalized opportunities that we continue to take advantage of, we’re seeing consistent retention rates in our omnichannel loyalty programs of over 80%,” he said. “So if you get the right combination of this and personalize it in your paid media and so on, it can lead to some pretty big wins and better loyalty for you. We’ve had over a 400% increase in the amount of new customers that we’ve acquired digital. So you can see why this matters a great deal.”
Intertwined with personalization is the need for technology that allows shoppers to connect across brick-and-mortar, online, mobile and social channels as well as enables retailers to collect and analyze troves of data. Holt cited a couple of intriguing stats: Most people check their smartphones over 63 times a day, and Americans spend an average of 5.4 hours a day on their mobile phones.
“One of the things to keep in mind is that much of what we’re looking at today is because we have technology that enables us to do it, whether it’s a platform or the ability for us to consume mass amounts of data and process those in a way that allows us to have better, action-based analytics or build machine-learning algorithms. All of these things are a byproduct of the technology platforms that enable it,” he said.
In turn, Holt pointed out, “it’s easy to see how important both the in-store and the online experiences are with customers and how we must create that fully integrated omnichannel experience.”
Working hand in hand with personalization is the idea of “local and trust” to build relationships and make a stronger connection with customers, both in a grocery chain’s market area and in the communities served at the store level. Holt said that could range from sourcing with local farmers and producers, holding and sponsoring community events, and supporting local organizations and causes to tailoring product selections and promotions to local shoppers, and just being there for customers in times of need — such as during the COVID-19 pandemic.
“When we think about this idea of ‘local and trust,’ it’s not only the trust in the brand itself — like Stop & Shop or Hannaford — but it’s also that, ‘I can trust that you will be my advocate or my ambassador for taking care of me, providing the solutions that I need, the assortments that I need, the value that I need, but also being capable of picking the freshest berries for me, having 100% of my order available and not having high out-of-stocks,’ ” according to Holt.
Customers, too, are turning to their local grocer to help them achieve their health and wellness goals. Holt said the market for products focused on health and well-being totaled more than $4.5 billion in 2019, and most people reference at least three health apps.
“Consumers are really looking for brands to create healthy solutions and partnerships and better versions of existing products. People are looking for transparency in their products, and they’re looking for clean labels in their products. This is
very important to us,” he said. “We think this change is going to continue into the future, based on our ability to filter for consumers around their lifestyle and dietary needs. We’re doing that today, and you’ll see this from many retailers in terms of building out health platforms.”
That also includes eco-consciousness. Holt said an Ahold Delhaize USA survey showed that 43% of customers are “very focused” on sustainability and consider it important.
“Consumers are expecting retailers to provide these healthy solutions, make life easier and to do it in an affordable way. We think that this will be a very big part of what we do,” he said. “Were very focused on not only transparency and clean labels, but also on reducing packaging and packaging waste. So we see health and sustainability as key to continue to differentiate in our industry.”
Private brands have a big role to play as well, Holt noted. The value equation for own brands includes not just affordability, but also innovation, differentiation, responsibility and convenience, such as in providing turnkey meal solutions.
“It isn’t just the traditional idea of private brands as a better value. It’s really about private brands being differentiated in a way that actually provides additional value to consumers,” he said. “We have astrong private brands, and continuing to innovate in this space is really important for us. In the past year, we saw 34% growth in private brands. Twenty-five percent of consumers have tried a new retailer private brand, and 73% of those consumers say that when they’ve tried these brands, they’ll continue to use the brands. So it really is a great opportunity for us.
“Quality, sustainability, packaging, innovation — all of these may be critically important as we think about private brands going forward,” he added, “and the prominence of private brands will continue to grow into the future.”
For Ahold Delhaize USA, a fully integrated omnichannel experience delivering customer-relevant value encompasses personalization, loyalty, price, assortment (including local items, private brands and ready-to-eat offerings) and a fast, seamless website and mobile app, serving shoppers via “endless aisles” digital marketplace, brick-and-mortar, click-and-collect and home delivery channels.
During its 2020 fiscal year ended Jan. 3, Ahold Delhaize recorded 105% U.S. online sales growth, surpassing its target of over 90% growth. Helping to drive that gain was an accelerated rollout of click-and-collect service, from 883 pickup points in the third quarter to 1,116 sites by the end of the fourth quarter, reaching the company’s 2020 target of 1,100 U.S. pickup locations. By the end of fiscal 2021, Ahold Delhaize USA aims to expand to about 1,400 click-and-collect sites plus boost online capacity by another 30%, which would come after a 70% increase in 2020.
“We believe we’re on the right path to serve the changing consumer that we see today, and we believe there’s a lot of promise for the future for our industry,” Holt said. “We know that we can grow each brand strength by creating a fully integrated and personalized experience for customers. We’re building an ecosystem, and there will be four channels to serve customers: in-store, click-and-collect, delivery and marketplace. We believe that these, combined with our stores at the center, will be the key to how we maximize our opportunity to engage with customers and provide solutions that really meet their needs.”