Ahold Delhaize is evolving its grocery operations in response to shifting consumer preferences, focusing on value, quality, and convenience in new, innovative ways. CEO Frans Muller shared the company’s strategic approach at Groceryshop in a conversation with Melissa Repko, retail and consumer reporter for CNBC. The company’s data-driven strategy, informed by cross-generational research, reveals that value now encompasses price sensitivity, product quality, and customer experience across both physical and digital shopping environments.
Key Adaptations by Ahold Delhaize:
Value and Price Sensitivity
Rising inflation has made price a top concern for shoppers, and Ahold Delhaize is responding by offering a range of value-driven options:
- Competitive Shelf Pricing: Ahold maintains competitive prices while balancing consumer expectations of value.
- Private Label Expansion: A key initiative is the company’s target to grow its private label penetration to 45% of total food sales by 2028, from its current 38%. Private labels allow Ahold Delhaize to offer unique product formulations, competitive pricing, and a focus on health and sustainability, meeting specific consumer needs.
- Personalized Pricing: Leveraging data, Ahold Delhaize provides tailored pricing to individual customers, enhancing loyalty by offering relevant discounts based on purchasing habits.
Quality Beyond Products
Ahold Delhaize is redefining what quality means for its customers:
- Enhanced Customer Experience: Whether in-store or online, Ahold Delhaize prioritizes a seamless, enjoyable shopping journey. This includes an intuitive user interface for online shoppers and personalized experiences in-store.
- Healthy and Sustainable Choices: Responding to growing demand, particularly among younger generations like Gen Z, Ahold is expanding its assortment of sustainably sourced and healthy products, ensuring that quality extends to the ethical sourcing and health benefits of its offerings.
Convenience through Omnichannel Integration
Convenience is no longer just about store locations. Ahold Delhaize is transforming how customers shop by integrating technology:
- Omnichannel Shopping: In the U.S., 8% of sales are now online, with Europe at 10%. Ahold is enhancing its omnichannel strategy to ensure a consistent shopping experience, regardless of whether customers buy in-store or online.
- Click and Collect: As e-commerce evolves, click-and-collect services have grown to account for 60% of Ahold’s online sales, offering customers flexibility and time-saving solutions.
- AI-Powered Tools:
- Dynamic Pricing: Using AI and electronic shelf labels, Ahold adjusts prices in real-time based on demand and product shelf life, particularly in the Netherlands. This not only benefits consumers with better deals but also significantly reduces food waste.
- Personalized Offers: Ahold’s AI-driven apps deliver customized recommendations, further enriching the customer shopping experience.
- Semantic Demand Forecasting: Advanced algorithms help consumers by predicting needs based on queries like meal preparation or dietary requirements, adding convenience and personalization to grocery shopping.
Challenges and Considerations:
- Consumer Pushback on AI: Ahold is mindful of customer concerns about privacy and AI-driven practices, particularly in dynamic pricing. The company emphasizes ethical data usage and customer consent, ensuring that personalization does not compromise trust.
- Balancing Private Label and National Brands: With the growth of its private label offerings, Ahold carefully manages relationships with national brands. Collaborating with consumer packaged goods (CPG) partners, the company ensures its product mix remains balanced and diverse for consumers.
- Responsible Use of AI: While AI offers immense potential, Ahold Delhaize is cautious about fully implementing large language models to avoid inaccuracies and protect customer data.
Looking Ahead: A Focus on Omnichannel and Community
As the future of grocery continues to evolve, Ahold Delhaize is positioning itself for long-term success by:
- Omnichannel Excellence: The company envisions a fully integrated shopping experience, where online and offline channels work together seamlessly to meet diverse customer needs.
- Community Connection: Physical stores will remain vital, not only for convenience but as community hubs. Ahold Delhaize aims to build stronger local ties through its 16 distinct brands, which are deeply embedded in the communities they serve.
- Talent Retention: The company recognizes that its people are key to navigating the disruptions in the grocery landscape. Maintaining a talented workforce will be critical to sustaining its leadership in innovation.
Through its blend of personalization, technology, and community focus, Ahold Delhaize is driving the future of grocery. By meeting customer demands for value, quality, and convenience, the company is creating a robust, data-driven shopping experience while upholding ethical standards in its innovations.
