Retail

Royal Ahold To Busy Americans: We'll Handle Dinner

By Steve Wynne-Jones
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As America’s increasing disposable incomes encourage more people to eat out, the Dutch owner of Stop & Shop supermarkets is making changes to keep them dining in.

Royal Ahold NV will be placing a bigger emphasis on ready-made meals and prepared meal kits as it seeks to offer customers the convenience they crave, Chief Executive Officer Dick Boer said in an interview at Bloomberg’s New York headquarters.

"The US consumer is feeling better, I think you’ll see a bit more eating out again," said the CEO, whose company is set to acquire the Belgian owner of the Food Lion banner. "What we need to do is to create more alternatives in our stores."

A lower oil price means Americans can spend less filling their tank and more eating in restaurants, even though incomes haven’t increased substantially, according to Boer. That’s putting pressure on the likes of Ahold, also owner of the Giant chain and Peapod online grocery service, which until now have benefited from a shift toward dining at home amid reduced affluence. Adapting to modern consumer demands will be essential as the retailer seeks to accelerate its identical sales growth in the US.

Private Labels

Ahold plans to apply lessons learned in its home market of the Netherlands by offering more ready-made dinners and kits containing all ingredients needed to prepare a meal. This should help spur the contribution of private labels to 40 percent of sales this year from 38 per cent in 2015, Boer said.

Getting its offer right in the US will be critical for a company that will control more than 4 percent of that country’s more than $1 trillion grocery market after its takeover of Belgium’s Delhaize Group, based on 2014 estimates by researcher Euromonitor. Globally, the combination will have 6,500 stores and annual sales exceeding €62 billion ($70 billion).

Ahold isn’t alone among U.S. retailers in focusing more on prepared foods, a market that grew by more than 9 percent in 2014, according to a study by the Food Marketing Institute and Technomic published in February. The grocer joins rivals including Wal-Mart Stores Inc., Kroger Co., Whole Foods Market Inc. and Wegmans Food Markets Inc. in offering more prepared foods to customers.

"The trends in consumers eating away from home are being fought among restaurants, supermarkets and even convenience stores," Food Marketing Institute’s Rick Stein said in a February statement.

Boer expects the Delhaize deal to complete by mid-2016, and said the company’s immediate priority will be integration. The CEO will also keep an eye out for opportunities in the US, he said, while stressing that further expansion isn’t a key part of his strategy.

News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here

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