In business terms, 2021 has been a good year for Ahold Delhaize, but not necessarily also for the employees’ morale. That is why the supermarket giant wants to focus even more on employees, sustainable growth and technological innovation in the future, its annual report indicates.
Second year of pandemic weighs heavily
“In many ways, the second year of the pandemic has been more challenging for people”, CEO Frans Muller noted in the group’s latest annual report. Although it has been a good year for the business, people were getting tired, and the company noticed a greater mental strain.
Last year’s challenges only empowered the supermarket holding company in its strategic ambitions, Muller says. The CEO saw a shift to omnichannel, with a continuously increasing role for e-commerce, but also “a strong connection between the health crisis, natural disasters in many of our brands’ markets and the urgent climate crisis facing our world”.
At the end of last year, the merged group announced a new five-year plan, ‘Leading Together’, based on the central pillars of driving omnichannel growth, elevating health and sustainability, cultivating talent and strengthening operational excellence. Each of these pillars corresponds to trends observed by Ahold Delhaize.
More technology than ever
In general, Ahold Delhaize expects people to continue to work from home more and eat at home more often after the Covid pandemic. A survey shows that just over half of its customers, both in the United States and Europe, intend to do so. Moreover, consumers want to continue to reduce their spending, which, according to the supermarket group, offers opportunities for private labels and for broadening the definition of price-quality further than merely ‘cheap’. The retailer hopes that health, sustainability and experience will also play a role.
As far as digitisation is concerned, the group sees that competitors constantly raise the bar. In particular, the emergence of express grocery delivery companies such as Gorillas and Getir and the move by Deliveroo to also deliver groceries means that customers are constantly expecting more availability, range, and speed. Ahold Delhaize, therefore, “invested proportionally more in technology in 2021 than we did in the years before”.
Like many competitors, Ahold Delhaize wants to further emerge as a data and advertising company. Customer data can be used to offer services in-store and generate advertising revenue. By 2025, the group hopes to bring in no less than a billion euros in additional turnover. The group already expects a lot from the planned IPO of Bol.com this year, which should be an essential step towards making e-commerce profitable. In the Benelux, the distributor also wants to establish more connections between food (Albert Heijn and Delhaize) and non-food (Bol.com).
Underestimated plastic challenge
From all sides, Ahold Delhaize feels the pressure to become more sustainable in a transparent way. Since 2016, total food waste in the company has been reduced by 18 % to 9,900 tonnes, but by 2030 this should be 50 % less. Since 2018, the group has emitted 31 % less CO2, and by 2040 that number should be zero.
However, banning plastic packaging is proving a more difficult task than expected. “While we are committed to deliver a path of continuous improvement on this front, we also need to re-evaluate a more realistic go-forward ambition,” Muller says in response to recent criticism. Recycling is a problem for the materials themselves, but recycling infrastructure is also lacking in some countries.
People become priority
(Prospect) employees also expect efforts, and the supermarket group wants to be on good terms with them, given the ongoing labour shortage in the United States and elsewhere. Ahold Delhaize wants to focus more on values and work-life balance to attract and retain people. The group aims for 100 % gender balance, a workforce that is 100 % reflective of the market and 100 % inclusive.
Flexibility is very important for millennials and young people from ‘Gen Z’. With 41 % of all employees at Ahold Delhaize being Gen Z’ers, this trend is a priority. At the same time, digitisation and automation will undoubtedly play a role in dealing with labour shortages.
To further reduce production costs, Ahold Delhaize is taking its entire logistics operation in the US in-house. In Europe, the group wants to save costs by purchasing the private brands together across the formulas. In time, Delhaize and Albert Heijn, among others, may include other private-brand products in their product offering.