Dutch retailer Ahold to cut costs and grow online sales

Dutch retailer Royal Ahold NV presented an update of its strategy to analysts and investors today at its European headquarters in Zaandam, the Netherlands.

The strategy has six pillars designed to accelerate growth in Ahold’s markets and boost online sales as part of a plan to grow its business over the next five years.

Ahold’s CEO, Dick Boer, said today: “Our new growth strategy will ensure Ahold remains successful and at the forefront of the food retail industry. We are reshaping our retail businesses to connect with our customers in a more personalized way and to provide an even better shopping experience in our stores and online.

“The six strategic pillars focus on different elements of our business. The first pillar will increase customer loyalty and drive identical sales growth. We want our businesses to be our customers’ favorite place to shop. We want our customers to enjoy our stores and our products so much that they do most of their shopping with us and recommend us to others. We are developing technologies that will ensure all of our customers have a seamlessly connected online and offline shopping experience.

“Our second pillar will broaden our offering by further developing and rolling out our successful store formats, expanding our online business, and building an even better, more relevant assortment with increased own-brand penetration. Our online businesses are already the number one online food retailers in the Netherlands and United States. We plan to significantly expand our footprint in the next five years and triple online sales to €1.5 billion. In early 2012, we will begin testing pick-up points in both Europe and the United States that allow customers to order online and pick up their groceries themselves from designated locations.

“The third pillar is designed to expand Ahold’s geographic reach. We are actively exploring opportunities to grow the business in and around our current markets in the United States and Europe. We are planning to open at least 150 new convenience stores in Europe, and a minimum of 50 supermarkets in Belgium in the next five years. At the same time we will continue to look for opportunities to expand into new geographies where we can achieve sustainable profitable growth.

“Our fourth pillar focuses on leveraging capabilities based on the Ahold Retail Model. We have a competitive advantage in a number of areas, including own brand products, customer loyalty and format development. By leveraging these skills across the group and applying the Ahold
Retail Model, we can further simplify our business, drive sales and reduce cost. The new
€350 million three-year cost reduction program we have announced today will enable us to continue reinvesting in the business for the benefit of our customers and shareholders.

“The fifth pillar centers on responsible retailing. This is a crucial component of our strategy and we are embedding it throughout the business. We believe that what is good for society is good for business too. We will build on and drive our corporate responsibility strategy and targets to engage our customers and our 215,000 employees.

“The sixth pillar of our strategy focuses on our people. We will continue to make sure we attract and engage the best talent in the industry and focus on their development. We already have a great workforce and will continue to develop the skills and capabilities of the group to help us achieve our growth ambitions. We will also continue to nurture diversity and the transfer of skills and knowledge across the business.

“Thanks to our disciplined approach in recent years, and the commitment of all our employees, we now have a solid platform on which to grow. The strength of our business, and the six pillar strategy, makes it possible to announce the new dividend policy today. We will further strengthen our financial foundation to create additional long-term, sustainable value for shareholders,” Boer said.

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