The Next 4 Years at Ahold Delhaize USA
More Operational Coverage
In May of this year, Ahold Delhaize unveiled the Growing Together strategy, which charts key growth and investment plans and ambitions toward 2028, at its 2024 Strategy Day, held at the retail conglomerate’s Zaandam, Netherlands, headquarters. Progressive Grocer was on site for the event.
“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,” explained Frans Muller, president and CEO of Ahold Delhaize, at the time of the rollout. “‘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.”
Growing Together 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 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.
Perhaps the biggest takeaway from the reveal of the strategy, especially in the United States, was the news that Ahold Delhaize’s Stop & Shop banner in the Northeast would shutter a number of underperforming stores as part of the chain’s revitalization. In July, the company said that out of nearly 400 locations, it had identified 32 that it would close on or before Nov. 2 across Connecticut, Massachusetts, New Jersey, New York and Rhode Island.
As for its remaining stores, “Stop & Shop is focused on growing through large, multi-year price investments and a stronger customer value proposition, both in-store and online,” noted Gordon Reid, president of Quincy, Mass.-based Stop & Shop, when the impending closures were revealed. “This means we’ll be focused on delivering lower everyday prices, as well as even more savings for our customers through strong promotions. Since 2018, we have completed more than 190 store remodels, with the customer shopping experience in mind. These stores are outperforming other Stop & Shop stores that haven’t been remodeled. We’re taking these learnings and implementing them at other stores as we build upon our strong foundation, similar to our new Boston flagship location, opened [in June] in the Allston Yards development. We look forward to continuing to serve and care for our communities and to grow Stop & Shop as a local brand for many years to come.”
Growing Together in the U.S.A.
Beyond all of the buzz generated by the Stop & Shop store closings, though, the Growing Together strategy offers a roadmap for growth across all of Ahold Delhaize’s banners, particularly in the United States, where its Food Lion, Giant Food, The GIANT Company, Hannaford, and Stop & Shop stores comprise “the largest retail group on the East Coast,” as Ahold Delhaize USA CEO JJ Fleeman pointed out in his May Strategy Day presentation, with each brand holding the No. 1 or No. 2 position in the majority of the markets where they operate.
“As we move ahead, we will leverage the strength of our people and our brands’ rich local heritages, alongside the strength of our total scale as we grow and evolve, with the customer at the center of everything that we do,” asserted Fleeman.
Noting that the chains had become “truly omnichannel retailers,” he noted: “Each brand now has a seamless integrated shopping experience that builds trust and loyalty across all of our channels. I personally believe this is where the magic begins. This is the power of food retailing as we move forward and into the future, and our brands are more than places to shop.”
Going forward, according to Fleeman, the U.S. operations will “continue to grow and expand our business. We’ll also expand in markets where we have density, grow our relationships with existing customers and make smart investments. … We will leverage both our local connections and our scaled opportunities to expand our portfolio. While our brands lead in the majority of their markets, it’s important to note that there’s still significant room for growth.
"Over the next four years, we’ll increase brand strength and density. By remodeling and/or adding more than 1,000 stores, we will strengthen our value proposition by investing over $1 billion in price, while at the same time expanding digital relationships and e-commerce capabilities. We will lead, we will grow, and we will differentiate our own brands by aligning our assortment to leverage scale and to innovate to get to the core of what customers need from our brands.”
He also talked about leveraging “complimentary income streams through opportunities like retail media, and [continuing to reduce] operating costs through robust efficiency programs. These moves, along with others, will earn us the right to win with our customers and in the marketplace.”
Brand by Brand
What do these strategy initiatives look like at the brand level? We’ve already heard about the plans to strengthen Stop & Shop, including investments in both price and the customer experience, but here’s a glimpse at what’s happening at Ahold Delhaize’s other local brands in the United States.
Salisbury, S.C.-based Food Lion, which operates more than 1,000 stores across the Southeast and is already “a powerhouse brand,” according to Fleeman, “will further accelerate growth through focused market expansion, including an enhanced omnichannel remodel program. Food Lion will build density with new stores and key markets and expand their outer-edge reach.”
“When it comes to assortment enhancements, we leverage our rich internal data along with marketplace data to reflect evolving trends in changing customer needs,” noted Food Lion President Meg Ham in a taped segment of Fleeman’s presentation. “Relevant assortment is essential to achieving our strategy. We’re especially focused on expanding our produce and whole meal solution offerings to better meet [the shopper’s] needs, and by partnering with local suppliers, we provide unique local items customers expect from their neighborhood Food Lion.”
Ham also pointed out that “our remodels create the platform to evolve the store experience and consistently generate strong return on investment. In addition to remodeling existing stores, we will accelerate new store growth and bring a differentiated shopping experience to even more communities, especially those where the population is expanding.”
“Likewise, gains in market share and strong brand reputation … give us confidence that Hannaford can invest and grow through targeted remodels, new stores in high-growth areas, and expansion on the outer edge of Hannaford’s footprint,” noted Fleeman of the Scarborough, Maine-based brand, which has 189 stores in Maine, New York, Massachusetts, New Hampshire and Vermont.
Meanwhile, in the Mid-Atlantic market, “The GIANT Company will grow with a focus on maintaining its leading market positions and increasing density in key markets, along with targeted remodels and price investments,” he said of the Carlisle, Pa.-based brand, which has more than 190 stores in Pennsylvania, Maryland, Virginia, West Virginia and New Jersey and recently celebrated its 100th anniversary.
Referring to the brand’s successful Choice Rewards loyalty program, Fleeman observed: “Millions of households participate in the program, which now accounts for nearly 90% of all transactions. I think it’s pretty cool, but imagine the possibilities with this program, when you start to really connect with families and communities to save them money, but more importantly, to help them in everyday life.”
Over the next four years, The GIANT Company will strategically invest in price and explore new stores and formats in [its] region,” he added. “I look forward to seeing The GIANT Company continue to win in [its] markets.”
Also in the same region, “Giant Food will build on its strong heritage through strategic investments and price profit brands and remodels,” said Fleeman.
Owing Own Brands, and Much More
After discussing how each local brand would grow its business, he asserted, “At the center of each brand’s assortment is their own-brand offering.”
Observing that “95% of our U.S. baskets already have an own-brand item product,” Fleeman noted: “In that basket across our total store, we offer nine own-brand labels that span categories across the entire store. … Going forward, we’ll have a clear opportunity to lead across all of our own brands like we’ve done with Nature’s Promise. … In addition to continuing to expand and cultivate a compelling assortment, we will make a landmark $1 billion strategic price investment in our U.S. brands over the next four years. In an environment where customers are watching every penny, this will enable our brands to offer incredible value to their customers.”
Along with that investment, “our brands will strengthen their award-winning loyalty programs,” he said. “We will also continue to deepen relationships with customers by delivering value that is most meaningful to them, from personalized pricing to promotions. As a result, our digital customer engagement will be more than 50% by 2028, which of course will contribute to our goals of increasing omnichannel loyalty sales, and also our monthly active users.
"Another area that will fuel our growth is the use of technology, data and AI. … Technology and data are at the core of delivering for customers in the U.S. and around the globe. In the U.S., we’ve invested in the right set of digital capabilities already to create seamless tech-enabled experiences. We will build on this to drive further personalization, flexibility, delight and convenience that will increase customer connections underpinned by technology.”
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Harkening back to his mention of expanding retail media solutions for U.S. customers, Fleeman noted that the company had taken its retail media platform in-house last year. “Since making this transition, we’ve increased retail media income by approximately 30% — a significant increase to further grow in this area,” he said. “We will create unique shoppable content across channels and leverage innovative technologies for a truly connected shopping experience. As a result, customers will receive inspirational hyper-personalized content that makes shopping fun. That’s the power of the connection, but the beauty of our focus in this area is to provide a better customer experience so that they get more value for their money, that they have a better experience in their stores, and we continue to expand our brand’s permission sets with customers.”
Fleeman also emphasized the importance of “strong operational efficiency … to help us fund and to grow all of our business and to keep top of mind for our teams. As you know, we’ve already demonstrated our ability to generate these dollars over the past several years, but we’re even more confident that we can drive even more savings and further efficiency.
"First, we’ll continue to simplify and streamline our U.S. operating model to remove redundancy, to deliver the absolute best customer experience each and every day. Second, we’ll drive efficiencies in our supply chain and e-commerce fulfillment by improving operations and pivot to more store-based fulfillment. Third, we are investing in technology and AI to create greater accuracy in our operations while reducing costs. … Efficiency and effectiveness [are] key to freeing up the funds [we] need to fuel our growth in the U.S. We’re committed to unlocking savings to reinvest in our customers.”
The Power of People
Before he wrapped up his Strategy Day presentation, Fleeman made sure to speak about Ahold Delhaize USA’s commitment to its communities and its people. “Our brands are at the heart of the communities that they serve,” he affirmed. “That relationship is critically important to us and is at the core of each of our local brand strategies. Our teams make that connection every day. … We’ve donated more than 1 billion meals since 2020. We offer fresh and healthy assortments to all customers and associates, and we’re committing to sustainability ambitions across the entire value chain.”
He added: “Our people are what really makes our company. In fact, it’s one of our key parts of differentiation across all of our brands. … We remain committed to being the best place to work in food retailing and beyond among our teams.”
Fleeman closed by inviting any audience member living in one of the company’s branch geographies in the United States to “come in for a visit. I look forward to letting you see our Growing Together strategy firsthand. We’re proud of it, and we welcome the chance to have you experience it with us.”
Since the strategy officially rolled out a few months ago, things seem to be progressing well at the retail conglomerate.
“I am pleased to report a second-quarter performance that places us well on track to achieve our strategic aspirations and financial goals for 2024,” noted Ahold Delhaize President and CEO Muller in early August, when the company reported its financials for the quarter. “As I said in May, we have a strong foundation, and we are ready to set the pace for change in our industry. We believe we have a very compelling set of ambitions, which, on delivery, will yield strong growth for our company and our stakeholders.”
