Dive Brief:

• Ahold Delhaize expects net online sales across its grocery banners in the United States and Europe to double by 2025, officials of the Dutch retailer said Monday during the company's 2021 investor day.
• The grocery chain also projects that by 2025 its e-commerce business will be profitable on a "fully allocated" basis.
• Ahold Delhaize is looking to its digital platforms to lead the way as it strives to generate 10 billion euros ($11.4 billion) in additional sales between 2023 and 2025.

Dive Insight:

The ambitious targets Ahold Delhaize's management team described during its investor conference reflect the company's conviction that the increased focus consumers have placed on eating at home since early 2020 is permanent, said Frans Muller, the company's president and CEO.

Ahold Delhaize is especially excited about its e-commerce prospects and believes that aspect of its business will account for approximately 60% of the additional revenue it plans to add to its books during the next few years, Muller said.

Automation will play a key role in Ahold Delhaize's efforts to drive its results higher through its digital relationships with customers, Kevin Holt, CEO of Ahold Delhaize USA, said during the investor conference. The company believes that automated systems can offer productivity that is double what it sees when fulfilling click-and-collect orders, he said.

Ahold Delhaize is evaluating fulfillment technology from three retail automation vendors — Fabric, Takeoff Technologies and AutoStore — and recently opened a robot-driven e-commerce fulfillment center in Philadelphia based on AutoStore's system.

"We have a great opportunity for us to continue to learn from that and apply it," Holt said, adding that he does not yet know what proportion of its ecommerce sales it will eventually handle using automation.

Beyond the performance boost Ahold Delhaize hopes to generate from its intensifying investments in e-commerce, the company sees its digital operations delivering benefits across its operations, Chief Financial Officer Natalie Knight said.

Omnichannel consumers have bigger baskets, spend at a higher level and make more frequent purchases, and digital technology, increasing their value to the company, Knight said.

"This creates a virtuous cycle for everyone, and we are convinced it leads to a more rewarding shopping experience [and] significant gains in customer lifetime value across our brands. This is a new way of thinking, and we are working hard to embed it in our culture and our performance management," said Knight.

Ahold Delhaize expects to bring in 1 billion euros in complementary revenue by 2025, three times its current level, Knight added. The company will look to digital and in-store media in its U.S. stores to help drive that revenue stream, she said.

Knight said Ahold Delhaize is intent on building its position "as a technological and an AI leader in the food industry" and will "clearly over index to omnichannel and [digital] projects, real time data capabilities and automation."

She pledged, however, that Ahold Delhaize will continue to direct energy toward its brick-and-mortar retail locations.

"On this journey we will not leave our stores behind. We will continue to deliver vibrant new modern store formats and experience powered by technology and featuring tangible sustainability improvements," Knight said.

In addition, Knight said Ahold Delhaize will take a hard look at its spending even as it invests robustly in its capabilities, noting that she thinks the company still has room to improve its cost structure.

"I believe we definitely have more juice to squeeze in this lemon, regionally and globally," she said. "These activities are all about driving savings for our customers. And this is a muscle we're going to continue to flex, and it allows us to be consistent and drive price competitiveness, and test and learn and grow in the highly fluid omnichannel space."

In an effort to take better advantage of investor excitement in its e-commerce operations, Ahold Delhaize plans to look into selling some shares in its profitable bol.com online unit, which operates in the Netherlands and Belgium, through a "subsidiary initial public offering," Muller said. The stock sale is likely to take place during the second half of 2022.

"We're always a little bit frustrated about the fact that the value of the great business of [bol.com] was not properly reflected in the total valuation of our total company," Muller said, noting that the company believes "it's the right time to get some online currency."