Ahold Delhaize Introduces Growing Together Strategy

Updated purpose building on core strengths unveiled at company's Strategy Day 2024

5/23/2024

Ahold Delhaize’s new growth model is focused on winning with its existing and future customers.

Ahold Delhaize launched its Growing Together strategy, which outlines its key growth and investment plans and ambitions toward 2028, at its 2024 Strategy Day, held May 23 at the retail conglomerate’s Zaandam, Netherlands headquarters.

“We have taken a multi-stakeholder approach to developing this new strategy, ensuring we balance the needs of our customers, the people we work with and broader societal dimensions,” said Frans Muller, president and CEO of Ahold Delhaize. “'Growing Together' ensures we will stay at the forefront of innovation in healthy foods, omnichannel experiences and supply chain transformation, serving customer needs through a well-invested and future-focused foundation. I am encouraged by the numerous avenues we have across our great local brands to realize our growth potential. By focusing on the things we do exceptionally well, we are together committed to fulfill these ambitions. By taking bigger steps, investing in our people and leveraging technologies, we are excited to unlock our purpose.”

The strategy consists of six strategic priorities at a brand and functional level:

Thriving people: Creating a workplace where everyone is heard, valued and has purpose, to inspire growth and collaboration.
Healthy communities and planet: Helping the transition to a healthy and sustainable food system.
Vibrant customer experiences: Offering an expanded ecosystem of of integrated products, services, channels and data.
Trusted product: Providing healthy, fresh, affordable and accessible items for customers.
Driving customer innovation: Building profitable complementary businesses and leveraging innovation to support future customers and spur further growth.
Portfolio and operational excellence: Using technology and data, providing savings for customers and leveraging scale to achieve optimal operational efficiency.

Ahold Delhaize’s new growth model is focused on winning with its existing and future customers. By having its loyalty programs lead with digital-first content, the company intends to increase omnichannel loyalty sales penetration to more than 80% by 2028. Along the way, it intends to shift loyalty customers from physical cards to its digital apps, which the company believes should lead to a rapid rise in monthly active users, with a target of 30 million by 2028.

The growth model’s components are as follows:

Invest in the customer value proposition (CVP): To drive market share and volume growth, the company will boost own-brand share toward 45% of total store sales, from its current 38% figure; moving healthy sales from only the own-brand assortment to full-store sales; and taking effective action on assortments and promotions to improve price perception.
Densify and grow markets: Optimizing its portfolio and making necessary interventions when brands are facing challenges will be key to elevating the quality of its sales, with a return to more pronounced organic store growth in the United States a central part of the plan, particularly the acceleration of the Food Lion and Hannaford brands. Additionally, Ahold Delhaize will work to ensure “a stable and thriving future” for Stop & Shop.
Innovate for growth and efficiency: By leveraging its data to drive retail media, data and insights, partnering with other industry leaders to develop strategic capabilities, and scaling new business models in the B2B and B2C areas, Ahold Delhaize aims to grow complementary income streams to around €3 billion (US $3.2 billion) by 2028.
Leverage and lower its base: Between 2025 and 2028, Ahold Delhaize is aiming for €5 billion (US $5.4 billion) in cumulative savings by ramping up its efforts in such areas as joint sourcing; incorporating AI and automation in logistics, distribution, store operations and the back office; and streamlining and refining its operating model to enable the company to operate more efficiently and sustainably.

“Given our regional diversification, brand diversification, and the blend of growth and efficiency opportunities, the power in our portfolio is the opportunity to utilize our size and scale and the synergies of our parts to reinforce each other,” the company noted. “Building a quality top-line in both our regions will also have a long-term benefit for a quality bottom line.”

The company’s other financial and strategic goals for 2025-28 included outperforming the traditional grocery market and achieving a 4% net sales CAGR; maintaining industry-leading underlying operating margins averaging 4%, increasing the Save for Our Customer goal to €5 billion (US $5.4 billion) cumulative; maintaining a gross cash capital expenditure cadence of 3% of net sales; growing underlying earnings per share at a high-single-digit CAGR versus 2024; generating strong cash flow to support consistent and growing shareholder returns; deliver on sustainability ambitions, such as progressing on its near- and long-term scope 1, 2 and 3 emission reduction targets; driving progress on having a workforce that’s 100% gender balanced, 100% reflective of its communities and 100% inclusive.

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In regard to the the company’s American operations, Ahold Delhaize USA CEO JJ Fleeman said: “As the largest grocery retailer on the East Coast, Ahold Delhaize USA and its local brands have a rich heritage in the markets they serve, with loyal customer bases, trusted products and a reputation for being an integral part of their local communities. Over the next several years, we will strengthen the market position for each of our brands, including the revitalization of Stop & Shop. We will improve value for customers through price investments and enhance the customer experience through 1,000 targeted remodels and new stores. We will lead, grow and differentiate in Own Brands, build digital relationships through more personalized value, and improve operational efficiency at every level. With these moves, underpinned by strong talent and innovation, our brands are well positioned to lead in the grocery industry for years to come.”

When asked by Progressive Grocer on how the revitalization of Stop & Shop would differ from the company’s earlier store remodels of 190 of the chain’s approximately 400 stores, which included a refreshed logo, Fleeman noted the brand’s strong competitive position in the northeastern United States, and how the previous round of renovations had included improvements to the e-commerce offering, the Go Rewards loyalty program and the overall value proposition. Although these remodeled stores are performing better than locations that haven’t been renovated yet, he said that future overhauls would significantly focus on value and make more efficient use of capital, providing elevated customer service and an enhanced local assortment. Describing the upcoming remodels as “a significant step change” in terms of such areas as value and service, Fleeman asserted, “We’re pleased with our progress, but we can do better.”

Ahold Delhaize serves 63 million customers each week, both in stores and online, in the United States, Europe, and Indonesia. Together, these brands employ more than 402,000 associates at 7,716 grocery and specialty stores. Ahold Delhaize USA, a division of Ahold Delhaize, operates more than 2,000 stores and 20 distribution centers across 20-plus states. It is No. 11 on The PG 100, Progressive Grocer’s 2024 list of the top food and consumables retailers in North America. Ahold Delhaize’s U.S. companies include its local brands Food Lion, Giant Food, The Giant Co., Hannaford, and Stop & Shop. PG also named Ahold Delhaize USA one of its Retailers of the Century and one of the 10 most sustainable grocers in 2024.