Dive Brief:
- Ahold Delhaize announced CEO Dick Boer will retire from the company and be replaced by Frans Muller, the company’s current deputy CEO and chief integration officer, according to a news release. The transfer, which confirms earlier reports, will happen on July 1. Boer will be available to the company as an advisor until mid 2019.
- Prior to the merger that formed Ahold Delhaize in 2016, Muller served three years as president and CEO of Delhaize Group. He has also served on the management board of German retailer Metro AG and was the CEO of Metro Cash & Carry for five years.
- “Today, our company is well-positioned for long-term growth, creating a natural moment for me to step down,” Boer said in a statement. “I am proud of what we achieved together and it is my absolute pleasure to be handing the helm to Frans, who I have come to know as a talented leader.”
Dive Insight:
According to reports out of Europe, Frans Muller pushed for Ahold and Delhaize Group to combine, and post-merger has overseen the joining of their operations. The deal has been widely viewed as successful, with Ahold Delhaize set to see $879 million in cost savings over the next three years, making Muller a natural choice to lead the company.
The main challenge for Muller and for Ahold Delhaize moving forward will be to keep its keep its stores relevant in a fast-evolving U.S. market, where the company does two-thirds of its business. The retailer’s stock took a hit when Amazon bought Whole Foods Market last summer for $13.7 billion, and it has struggled to recover.
To stay competitive, Ahold Delhaize's U.S. banners, which include Stop and Shop, Food Lion, Hannaford and Giant stores, are focused on operational efficiency and freshening up private label, loyalty programs and even store layouts. At Food Lion, the “Easy, Fresh and Affordable” initiative, focused on better store layouts and assortment, has been a positive, while Hannaford recently introduced a new loyalty initiative that rewards private label purchases.
Ahold Delhaize is also focused on improving its online sales. It's teamed up with third-party provider Instacart in numerous markets, and is pushing for better performance from its pure-play offering, Peapod. Online sales increased 23.2% in the fourth quarter, reaching a total of $3.5 billion for 2017. The company said last fall it plans to increase spending on e-commerce by 50% this year.
Ahold Delhaize has long maintained that its U.S. brick-and-mortar presence gives it an advantage when it comes to e-commerce. Peapod, for example, can take unused storage space in a Giant, Food Lion, Stop & Shop or another one of its banners and turn it into a mini-warehouse to complete orders for area customers. However, executives have recently said that Peapod isn’t living up to expectations, and that the company will focus this year on improving the service, which serves 24 markets, mostly in the Northeast.
Ahold Delhaize faces the same stiff competitive headwinds as other supermarket companies. Amazon, Walmart and Aldi are formidable opponents. Under Boer, the European giant has been doing many of the right things to get in position for the future of food retailing, and Muller appears to be ready to continue the job.
