Ahold’s online strategy and ambition Hanneke Faber Chief Commercial Officer 1 Contents • Retail landscape • Ahold’s online strengths • Ahold’s online strategies for growth 2 Contents • Retail landscape • Ahold’s online strengths • Ahold’s online strategies for growth 3 Digital developments impacting retail landscape • “Age of transparency” • Price / value • Food integrity • Technology advances / Moore’s law 4 Predicting what’s next in tech can be perilous… 5 Online market growth will continue Close to 20% of general merchandise sales expected to be online in 2020 3-5% of food sales expected to be online in 2020 General merchandise Advanced shift Food Emerging shift 19% 18% 14% 11% 8% 4% 1% 2013 2020 1% 2013 Source: combination of McKinsey, Euromonitor, Forrester, Ahold research 6 1% 3–4% 4–5% 2020 Customer expectations are increasing rapidly Delivery times Delivery fees Assortment Same / next day Decreasing tolerance for fees, especially in general merchandise Unlimited, including fresh and frozen, services 7 Marketplaces, marketplaces marketplace as % sales 20 16 10 8 2012 8 2013 2014e 2015e Contents • Retail landscape • Ahold’s online strengths • Ahold’s online strategies for growth 9 Ahold’s online growth ambition: 20-25% CAGR Ambition 2017 €2.5 billion online sales* 2014 €1.4 billion online sales* €2.5 billion €1.4 Peapod Albert Heijn Online bol.com Peapod *Estimated consumer sales includes sales from third parties (f.e. Plaza sales) 10 Albert Heijn Online bol.com Ahold has a unique set of strengths to win online Strong online brands in dense urban markets Easy and inspirational online shopping experience Broad range of high quality products 11 Serving customers anyhow, anytime, anywhere Operational excellence in online fresh food Ahold has a unique set of strengths to win online Strong online brands in dense urban markets Easy and inspirational online shopping experience Broad range of high quality products 12 Serving customers anyhow, anytime, anywhere Operational excellence in online fresh food Strong online brands with market leading positions #1 online retailer in the Netherlands / Belgium #1 online food retailer in the Netherlands (ah.nl) #1 online food retailer in the United States • Five million active customers • Covers 84% of Dutch households • Covers > 50 million people, 17% of U.S. population • More than 25,000 SKU’s • 12-18,000 SKU’s • More than nine million items • More than 4,000 merchant partners through our marketplace, Plaza • Average items / order: 74 • Average items / order: 1.8 13 • Average items / order: 55 Customers love and trust our brands Top 100 most trusted Dutch brands (2013 IPSOS Brand Monitor) 1. 2. 3. 4. 5. 4. 5. Top 100 most influential Dutch brands (2013 IPSOS Brand Monitor) 1. 2. 3. #61 in U.S. Internet Retailer Top 500 14 6. 7. We operate in dense urban markets, which allows us to be profitable in home delivery • The Netherlands (404 p/km2) and Belgium (361 p/km2) are both in global top 10 most densely populated countries. • U.S. northern East Coast ranks as the 11th most densely populated global region in the world (450 p/km2), and is the most heavily urbanized region in the U.S. • Our 25 years of online logistics experience makes us profitable on mature, dense routes persquaremile.com 15 Ahold has a unique set of strengths to win online Strong online brands in dense urban markets Easy and inspirational online shopping experience Broad range of high quality products 16 Serving customers anyhow, anytime, anywhere Operational excellence in online fresh food Just in time personalization at bol.com 17 AH.nl: tens of thousands of recipes, straight to list 18 Peapod: One-click easy filters 19 Proprietary systems HR Leading, innovative technology capabilities • 1,000+ IT experts (Amsterdam, Utrecht, Chicago, Boston) Agile, autonomous teams, with state-of-the-art software development skills • Best-in-class application of big data concepts and techniques Supply chain systems Transportation Price management Web and mobile experience Customer service systems • • • • • • Central replenishment systems (<1 day of inventory) Warehouse management systems with smart picking algorithms (>400 items / hr food picking) • • Automated optimized routing (84% full vans) Patented yield management real-time scheduling (fee / slotting) Driver mobile field technology - text alerts for ETA, arrival and pickup • • Automatic benchmark pricing Integrated pricing with stores, including zip code-level pricing in U.S. Personalized offers, valid off- and online 20 • • • • • Strong mobile interfaces (40%) Real-time personalized websites Intelligent search Recipe integration “Guess my order” Top retail apps: Appie #1 in NL; Peapod top 10 in U.S. InternetRetailer.com • • Advanced customer service systems supporting multiple centers and phone / web / Chatbot / email Track and trace Sophisticated fraud protection (low bad debt) Ahold has a unique set of strengths to win online Strong online brands in dense urban markets Easy and inspirational online shopping experience Broad range of high quality products 21 Serving customers anyhow, anytime, anywhere Operational excellence in online fresh food Broadest range online in the Netherlands at bol.com • Grew from one to 26 categories from 1999 to 2014 • More than nine million products 22 Broadest range through the premier Dutch marketplace Key results to date: • Over €100 mln third-party revenues • One in six products sold via third parties • Partner’s revenue typically increased by 10-30% 23 Unique ranges of food products Own brand Own-brand sales: AH.nl 51% Peapod 30% Quality and diversity in Fresh Fresh / frozen sales: AH.nl 47% Peapod 40% 24 Ahold has a unique set of strengths to win online Strong online brands in dense urban markets Easy and inspirational online shopping experience Broad range of high quality products 25 Serving customers anyhow, anytime, anywhere Operational excellence in online fresh food Serving customers anyhow, anytime, anywhere with unique omni-channel shopping options Omni-channel customers are more loyal and spend >20% more vs. supermarket-only customers Unrivalled delivery options 1. Broad store network 2. Home delivery 3. Pick-up points on average +21% 26 Omni-channel, cross brand shopping • One loyalty card on- and offline • Joint marketing programs 27 Ahold has a unique set of strengths to win online Strong online brands in dense urban markets Easy and inspirational online shopping experience Broad range of high quality products 28 Serving customers anyhow, anytime, anywhere Operational excellence in online fresh food Operational excellence in fresh food, built on an omni-channel supply chain Best-in-class sourcing for on- and offline Simple inbound 29 Efficient picking and transport Contents • Retail landscape • Ahold’s online strengths • Ahold’s online strategies for growth 30 Ahold’s online strategies for growth More customers More places More choices Market share and market growth Well-positioned for geographical expansion Continue to expand quality, ranges, value and choices for our customers and our partners 31 More customers - significant opportunities for growth • Online market growth expected to be robust in U.S. and NL 3.000 • Peapod: 2% share in best zip codes; average 0.5% 10% 2.500 2.000 1.500 • AH.nl: 6% penetration in Amsterdam, 2.5% national 1.000 500 • 40% of our 5 mln bol.com customers bought only from one single category 0 0% 2012 2013 2014E 2015E 2016E 2017E Online sales* • One out of two shoppers in the Netherlands shops via bol.com, but only one out of five shoppers in Belgium 32 Online share of total* More places - we are well-positioned for geographical expansion Gradual expansion into Midwest; Indianapolis warehouse to open in 2015 Entering north / south NL end-2014 Will enter Belgium in 2015 Amsterdam Rotterdam Midwest Antwerp 33 More choices - for our customers # of SKUs at # of categories 30 25 20 15 NJ warehouse 10 NY’s best 5 0 1999 2004 2009 10k 2014 34 18k # of SKUs More choices - for our partners What marketers are looking for: • Higher ROIs • Sufficient reach • More personalization • Richer product content and storytelling • Closer to point-of-purchase 35 More choices - for our partners National media reach: Netherlands • #1 newspaper: 530k • National news: 2 mln • #1 women’s magazine: 375k Ahold reach: Netherlands • Albert Heijn stores: 14 mln visits / week • Bol.com: 820,000 unique visitors daily • Allerhande magazine: 2.7 mln readers 36 In summary: we are well-positioned, and have vast opportunities for future growth We have clear strategies for growth: more customers, more places, more choices We have leading online positions and unique capabilities 37 Cautionary notice This presentation includes forward-looking statements, which do not refer to historical facts but refer to expectations based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those included in such statements. These forward-looking statements include, but are not limited to, statements as to online growth and strategy, investments, omni-channel strategy, customer expectations and untapped media and marketing opportunities. These forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond Ahold’s ability to control or estimate precisely, such as the effect of general economic or political conditions, fluctuations in exchange rates or interest rates, increases or changes in competition, Ahold’s ability to implement and complete successfully its plans and strategies, the benefits from and resources generated by Ahold’s plans and strategies being less than or different from those anticipated, changes in Ahold’s liquidity needs, the actions of competitors and third parties and other factors discussed in Ahold’s disclosures. The audience is cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of these presentations. Koninklijke Ahold N.V. does not assume any obligation to update any public information or forward-looking statements in these presentations to reflect subsequent events or circumstances, except as may be required by law. Outside the Netherlands, Koninklijke Ahold N.V., being its registered name, presents itself under the name of “Royal Ahold” or simply “Ahold”. 38
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