Dive Brief:
- Ahold Delhaize announced that it has created Ahold Delhaize USA as the new parent company for the corporation’s American banners, including Stop & Shop, Hannaford, Food Lion and Retail Business Services (RBS), a U.S. shared services company that supports these brands, according to a news release. The new company will begin operating next year.
- Ahold Delhaize USA’s CEO will be Ahold USA's current chief operating officer Kevin Holt — who began working for the company in 2014 and has held positions with Supervalu and Meijer — effective Jan. 1, 2018. He will continue to report to Dick Boer, Ahold Delhaize’s president and CEO.
- “Combining the parent companies of the U.S. brands and RBS is the natural next step in our brand-centric strategy in the U.S,” Boer said in the statement.
Dive Insight:
Ahold's integration with Delhaize has focused on a decentralized approach to operating in competitive East Coast markets. In naming executive appointments to each of its retail brands earlier this year — including Stop & Shop, Hannaford, Food Lion and Giant/Martin’s — Ahold Delhaize emphasized a “brand-centric” approach that would make local stores better equipped to tailor their locations to suit community needs.
But Ahold Delhaize also wants to leverage its collective power and foster unity among its various brands. Distribution, purchasing and innovation are just a few areas that have benefited from a collective focus, with the company’s Retail Business Solutions service acting as a hub for strategy and development.
Establishing Ahold Delhaize USA further highlights that need for unity, and it places management in the U.S. rather than in the Netherlands, where Ahold Delhaize is based.
Kevin Holt, who came to Ahold Delhaize in 2014 after serving as president of retail operations for Supervalu, faces the challenge of continuing to integrate operations across the company’s East Coast footprint, while also helping banners operate effectively and autonomously. Traditional grocers like the ones Ahold Delhaize USA runs are under tremendous pressure from Walmart, discounters and other alternative formats — with pricing pressure proving to be very intense even as deflation lifts.
Holt and his team will also have to address challenges in e-commerce. Company banners have been adding online ordering and delivery through services like Instacart, and will need to continue accelerating availability as competitors Walmart, Kroger and Whole Foods continue to grow in the space.
Ahold Delhaize USA will also be tasked with improving the performance of Peapod, the company’s dedicated online grocery. In this year’s third fiscal quarter, Peapod logged single-digit sales growth compared to the company’s 20% overall e-commerce sales growth. CEO Dick Boer attributed this to rising competition from rival grocers, along with the company’s failure to integrate Peapod’s merchandising with its physical store network.
On the plus side, Ahold Delhaize has turned in solid financial results overall this year and is seeing better-than-expected synergies from its merger. Over the next three years, the Netherlands-based company expects to see €750 million ($880 million) in cost savings — a sharp increase from the €500 million ($585.96 million) the company originally expected to save over the period.
