Netherlands-based multinational grocer Ahold Delhaize said digital and omnichannel engagement and store modernization efforts are paying off, particularly for its U.S. brands.
Reporting first quarter 2023 earnings on Wednesday (May 10) Ahold Delhaize President and CEO Frans Muller discussed trends impacting the grocery giant, telling analysts and investors that fresh and healthy products, own-brands, and an expanding omnichannel ecosystem are resonating with customers in Europe and the U.S.
Saying a “high-value, high-touch customer proposition” with a local community focus, together with “innovative and scalable platforms” are being supercharged with more real-time data to improve customer journeys.
Noting that the grocer is building deeper digital relationships at scale, Muller said, “A fully fledged, fully integrated, 360-degree digital shopping experience is no longer a nice to have, it’s … a must-have.” To illustrate, he pointed to high satisfaction with loyalty programs at Giant Food, Food Lion, and Stop & Shop, comprising its American arm, ADUSA.
“In Q1, we delivered 2.7 billion personalized offers to almost 30 million households, with the number of those households digitally engaged also up well over 10%,” he said. “The percentage of completely new customers to ADUSA brands and new signups is also rising — a telltale sign of how important the digital ecosystem is becoming when consumers begin looking for value across the competitive set.”
Discussing the importance of ongoing store modernization in the U.S. market, Muller said, “There is no doubt that the store modernization plan of the entire fleet of Food Lion stores from 2014 to 2021 contributed significantly to the 42 consecutive quarters of comp store sales group we just reported.” Food Lion is now starting on what he called a “multiyear wave of remodels under its omnichannel remodel program, starting with 70-plus stores this year.”
The first group of 29 remodeled stores will be completed this month, he said.
Chief Financial Officer Natalie Knight said, “With the price-value equation of utmost importance to customers as their spending power comes under more and more pressure these days, our group’s ability to move fast and proactively to visibly support customers on their shopping journey is clearly paying off.”
Saying U.S. sales grew by 5.7% in the first quarter, Knight said, “It’s clear that customers are finding great value through our brand’s various omnichannel propositions.” Online sales rose nearly 12%, with grocery online penetration rates climbing to high single digits.
Expanding on Muller’s comments about the U.S. region, Knight said: “Hannaford also continued its impressive accomplishments, gaining market share now for seven straight years since 2016, and growing 29 of the last 30 quarters. At Stop & Shop, we continue to realize strong sales momentum from the remodeled stores, especially those 12 that we’ve recently reopened in the New York metropolitan area, where we achieved an uptick in both traffic and units.”
Responding to an analyst’s question on how availability of goods impacted the quarter, Muller said, “An important reason for a strong result of the U.S. business in the first quarter was the positive decision we took a couple of years ago to take back the supply chain in our own control. This self-distributing character of the supply chain along the whole East Coast is bringing us … more shelf availability, which we see, I think, in the results coming in now.”
He said the supply chain change-up is also yielding benefits in transparency relative to vendor relationships, and that over time it’s expected to have a positive effect on working capital.
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