Zaandam, the Netherlands – Ahold’s senior management is today presenting an update of its strategy to analysts and investors at its European headquarters in Zaandam, the Netherlands.
Highlights
- New customer loyalty initiatives planned to add 1-2 percent to identical sales growth
- Online sales to triple to €1.5 billion by 2016
- Opening of a minimum of 150 new convenience stores in Europe and a minimum of 50 supermarkets in Belgium in the next five years
- Target to achieve 40% penetration of own brand in the United States
- Leveraging of global capabilities based on the Ahold Retail Model
- New €350 million three-year cost savings program announced
- New dividend policy that increases pay-out ratio to 40-50 percent of normalized net earnings and will contribute to significant increase of the 2011 dividend per share
The strategy has six pillars designed to accelerate growth in Ahold’s existing and new markets.
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.
In the next five years, Ahold expects to achieve the following as part of its strategy:
Connect with customers in a more personalized way
- New customer loyalty initiatives planned to add 1-2 percent to identical sales growth
Accelerate growth in existing and new markets
- Triple online sales to €1.5 billion by 2016.
- Introduce pick-up points in Europe and the United States to allow customers the option to order online and collect their groceries at designated locations.
- Open a minimum of 150 of our redesigned convenience stores in Europe and at least 50 supermarkets in Belgium in the next five years.
- Continue to enlarge our geographic footprint in Europe and the United States by acquiring or opening stores in existing and adjacent markets.
- Entry into markets where there are opportunities for profitable sustainable growth.
Leverage global capabilities based on the Ahold Retail Model
- 40% own-brand penetration in the United States.
- Remodel of 100 Stop & Shop and Giant Landover stores to the Giant Carlisle center store layout.
- Remodel of 50 large stores in the Czech Republic to our new compact hyper format.
Financial highlights
New €350 million three-year cost savings program.
New dividend policy to increase the pay-out ratio to 40-50 percent of normalized net earnings and contribute to a significant increase of the 2011 dividend per share.
