Dive Brief:
- Ahold Delhaize has spent $185 million across its retail brands so far in response to the global coronavirus pandemic, the company announced Tuesday. This includes safety measures, charitable donations and hiring 40,000 additional workers across its stores in the U.S., Europe and Indonesia.
- The company said its U.S. stores saw a 34% increase in comparable store sales during the month of March. It anticipates a 14% increase in comps across its Hannaford, Stop & Shop, Giant Food, Food Lion and The Giant Company banners for the first fiscal quarter of 2020. It will report full Q1 results on May 7.
- Ahold Delhaize maintained its full-year outlook, including earnings per share growth in the mid single digits.
Dive Insight:
Like so many other grocers, Ahold Delhaize has seen a massive sales boost due to coronavirus-driven panic buying and millions of consumers sheltering at home. Those gains, however, are largely offset by the steep costs of keeping pace with a global pandemic.
The company has spent close to $48 million on safety and protection measures, including plexiglass barriers at checkout and measures to adjust store flow. This includes implementing one-way store aisles, which Giant Food announced on Tuesday it would implement across its 165 stores. Giant Food has also distributed protective gear like plastic face shields, gloves and disinfecting wipes to employees.
Ahold Delhaize said it has spent more than $21 million on charitable donations, including a recent $10 million commitment to feed communities in need, support employees and their families and help fund the development of a vaccine for COVID-19.
The largest chunk of added operating costs has gone toward gaining and retaining workers. In addition to hiring more than 40,000 new employees to work registers, stock shelves and fill online grocery orders, the company is temporarily raising pay and providing bonuses. Stop & Shop workers are getting a 10% pay increase and additional sick leave during the pandemic.
To recruit workers, Ahold Delhaize said it has reached out to companies in sectors that have seen significant layoffs and furloughs, like tourism, hospitality and travel.
In its Tuesday earnings announcement, Ahold Delhaize CEO Frans Muller, like other company chiefs, said the long-term impact of the coronavirus on sales and consumer habits remains unclear.
“Although we continued to experience higher than normal sales growth through the end of March, there is increased uncertainty in sales over the course of the year, especially as it applies to changes in consumer shopping patterns and behavior,” he said in a statement.
One of the biggest question marks right now is online grocery. Millions of social distancing shoppers are turning to pickup and delivery, opening up opportunities to nab newly digital customers and greatly accelerate e-commerce’s trajectory in the U.S. But many are experiencing long waits for fulfillment and frustrating customer service experiences.
Hannaford last week restarted its curbside pickup service after shutting it down in mid-March but noted on its website that time slots are limited. As e-commerce demand grows in step with the pandemic’s expansion, retailers are under pressure to hire additional workers, expand capacity and update their systems to keep worried shoppers well-stocked and brand loyal.
