Dive Brief:

• Ahold Delhaize reported a 2.8% increase in comparable same-store sales for its U.S. division, driven by its Hannaford and Giant banners. Net income increased 25.7% to €407 million ($483.75 million). Overall net sales for the Netherlands-based retailer were €14.9 billion, a 2.5% increase over the year-ago period. 
• The company once again called out Food Lion as a top performer, with the chain reporting its 23rd consecutive quarter of volume growth. Food Lion’s “Easy, Fresh and Affordable” brand refresh, which includes extensive store remodels, has touched more than 500 stores to date.
• Ahold Delhaize reported a 23.2% increase in online sales, but U.S. e-commerce sales grew just 9%. The company is working to improve its Peapod division, and says it still plans to achieve €5 billion in online sales by 2020.

Dive Insight:

Ahold Delhaize continues to make sales gains and achieve crucial efficiencies through the completion of its namesake merger.

The 2.8% increase in same-store sales this quarter is a big improvement over the 1.1% drop during the same period last year. This shows the company is generating improved performances from its conventional supermarkets. That’s no easy task in the challenging East Coast markets where it operates — and it’s a positive sign at a time when Amazon and Walmart continue to expand their services and cut prices.

Among the company’s initiatives in Q1 was Hannaford’s rollout of a loyalty program that rewards private label sales and tailors offers for customers. That program — Hannaford’s first loyalty offering — capitalizes on key growth trends, and showed positive results from an employee trial run last summer. Ahold Delhaize also recently expanded its Guiding Stars nutrition labeling program — which was also developed by Hannaford — to all of its U.S. banners.

The Guiding Stars rollout highlights Ahold Delhaize’s ability to share not just operational knowledge and resources across its various brands, but consumer-facing initiatives, as well. As the company continues to introduce new programs, its ability to test and expand top-performing initiatives remains a unique advantage.

But if Ahold Delhaize wants to effectively compete with the likes of Amazon, Walmart and Kroger, it needs to improve its online sales. The 9% growth seen this quarter pales in comparison to the growth seen by other retailers. Earlier this year, Walmart got pummeled by Wall Street for posting 23% sales growth in its e-commerce division. Industrywide, online grocery sales are increasing by around 25% annually, according to Brick Meets Click.

Ahold Delhaize called out shortcomings with its Peapod division late last year, and is working hard to spur consumer interest in the pure-play online grocer. Peapod has announced numerous integrations involving meal kits and tech enhancements, including a voice ordering capability. The company also announced sweeping price reductions, and handles delivery from some of Ahold Delhaize’s banners, like Giant.

Many of Ahold Delhaize’s customers have access to online shopping through Instacart, giving the company a broad online presence. If it can apply the same sort of efficiency and innovation to e-commerce that it does to its store operations, Ahold Delhaize should see sales in the increasingly important channel increase.