Amid a strong third-quarter report, Ahold Delhaize presented big future plans for its private brand portfolio, including the launch of 1,500-2,000 more own brand products in 2021 and setting a goal to have more than half of its sales of own brands come from healthy products by 2022.
In its Q3 report, the retailer boasted same-store sales growth in the United States at 12.4% and 7.5% in Europe; digital sales in the U.S. rose 114.7% and net consumer online sales grew 62.6%. Total net sales came in at €17.8 billion, up 6.8%, or 10.1% at constant exchange rates.
Ahold’s quarterly report also shared broad omnichannel goals going into 2021 and beyond, with a focus on its store brands and growing digital efforts. Topping that list was the launch of 1,500-2,000 additional store brand items, joining an existing base of 15,000 private brand products already being leveraged inside its U.S. banners consisting of Food Lion, Giant Food, The Giant Co., Hannaford, and Stop & Shop.
Additionally, the retailers pledged to have 51% of own brand sales come from “healthy products by 2022.” Ahold said its banners going forward will focus on “increasing discounts and rewards on healthier products” and leverage the nutritional guidance platforms like Nutriscore and Guiding Stars. The own brand products will receive new “easy-to-use nutritional labeling” across the full portfolio by 2025.
This latest goal runs in concert with Ahold’s recent announcement on product transparency that included a goal to have 54% of private brand food sales be from products that achieve one, two or three stars through the Guiding Stars nutrition guidance program by 2025, and this year began its efforts to annually disclose the percentage of food sales generated from all products receiving that healthy rating through the Guiding Stars system.
Additionally, Ahold said it will partner with its own brands suppliers and national brand partners to halve food waste by 2030. The retailer will do this as a member of the 10x20x30 initiative. The company also is maintaining its previous goal set to have a fourth of its own brand plastic packaging come from recycled materials, and it has set a target to halve carbon emissions from its operations by 2030 and to reduce value chain emissions by 15%.
Other growth initiatives presented by Ahold included its U.S. businesses putting more emphasis on enhanced subscription offerings. The Giant Company will test a new subscription service in the first quarter of 2021 with an annual membership fee under $100 that garners users preferred delivery time slots and increased loyalty offers. Digitally, the U.S. stores will bolster an “endless aisle” strategy online, adding 80,000-100,000 general merchandise and food items in the first half of 2021 through the Mirakl platform.
Ahold said the U.S. retailers reach 90% of households in its markets with home delivery and click and collect, with around 70% having access to same-day options. Going into the new year, the company anticipates it will increase its online capacity by nearly 100% in the U.S. and nearly 50% in Europe, expanding click-and-collect locations in the U.S. to almost 1,400 by 2021, doubling in size in a year.
As it moves to integrate a self-distribution model in 2023, Ahold is also looking to improve upon its U.S. supply chain capabilities and is progressing ahead of schedule to have its first integrated distribution center to go live in 2021.
"We continue to adapt to changes we are seeing in consumer shopping patterns and behavior. Over the coming years, we will invest in our business to solidify our position as an industry-leading local omnichannel retailer and increase our share of the consumer wallet,” said Franz Muller, president and chief executive officer of Ahold Delhaize, Zaandam, the Netherlands. “We will find ways to improve our online productivity and are on track to achieve the €1.9 billion cumulative cost savings target by 2021. To benefit all of our stakeholders, we aim to strike the appropriate balance between investing in the health and safety of associates and customers, supporting our local communities, prioritizing environmental, social, and governance (ESG) initiatives, and returning capital to shareholders."