Royal Ahold: strong growth on all segments

The international grocery retail conglomerate Ahold Delhaize reported strong sales growth of 15,9% in Q4/2022. Almost all segments saw sales grow, even online grocery in the US, which grew by 31%.

The European online businesses were the only ones not to grow, as the non-food marketplace bol.com declined and online grocery in Europe stayed flat.

Ahold Delhaize has become one of the biggest online grocers in the world, with 8,6 billion € in revenues last year. On top of that, there is the non-food online marketplace bol.com with additional 2,7 billion €.

These online businesses provide 11,3 billion € in online revenues representing 13% of all sales within Ahold Delhaize.

The comparable sales of Ahold Delhaize grew robustly: 9,3% in the US and 5,7% in Europe. The company noted in its quarterly report that the growth resulted from "the introduction of more entry-priced products, expanded high-quality own-brand assortments and further rollout of personalized value through our digital omnichannel loyalty programs."

Two Ahold Delhaize companies highlight the excellent performance: Food Lion in the US and Albert Heijn in the Netherlands.

Food Lion continued its spectacular growth with its 41st consecutive quarter of comparable sales growth.

Albert Heijn: the only quality market leader able to outgrow the discounters?

Albert Heijn, on the other hand, was one of the very few incumbent and market-leading quality retailers that could fend off the discounters and grow market share. Albert Heijn's market share in the Netherlands increased from 35,9% to 37%.

In the earnings presentation, CEO Frans Muller emphasised two critical pillars in the success of Albert Heijn: a new loyalty program Albert Heijn Premium and a price matching program.

New loyalty program Albert Heijn Premium is a paid tier for the 25-year-old loyalty program. Customers get extra benefits for 12 € per year, such as 10% off of all organic products (good for more quality-oriented customers), accumulate savings faster, and get more personalised and premium offers. Albert Heijn Premium resembles the Tesco Clubcard Plus program introduced by the UK grocer couple of years ago.

The other aspect of Albert Heijn's success is the price matching scheme, where the company pledges to match prices for 1800 products to the lowest price in the market. The scale of the price-matching is wise, as Albert Heijn states that 1 800 products are equal to an entire assortment for some discounters. On top of that, you get all the quality products found in the store.

The other clever thing about price matching is that there is no reference to a low-priced competitor. The approach used by the UK grocer of pinpointing Aldi as the competitor to be price-matched does not seem a good idea as it only drives price perception … for Aldi.