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Hanneke Faber Chief Commercial Officer
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Ahold’s online strategy and ambition
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Contents
• Retail landscape
• Ahold’s online strengths
• Ahold’s online strategies for growth
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Contents
• Retail landscape
• Ahold’s online strengths
• Ahold’s online strategies for growth
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Digital developments impacting retail landscape
• “Age of transparency”
• Price / value
• Food integrity
• Technology advances / Moore’s law
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Predicting what’s next in tech can be perilous…
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Online market growth will continue
Source: combination of McKinsey, Euromonitor, Forrester, Ahold research
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Close to 20% of general merchandise sales expected to be online in 2020
18%
14%
19%
11%
4%
8%
1% 1% 1% 3–4% 4–5%
2013 2020 2013 2020
3-5% of food sales expected to be online in 2020
General merchandise Advanced shift
Food Emerging shift
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Customer expectations are increasing rapidly
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Delivery times
Same / next day
Delivery fees
Decreasing tolerance for fees, especially in general merchandise
Assortment
Unlimited, including fresh
and frozen, services
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Marketplaces, marketplaces
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marketplace as % sales
2013 2014e 2015e 2012
8 10
16
20
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Contents
• Retail landscape • Ahold’s online strengths
• Ahold’s online strategies for growth
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Ahold’s online growth ambition: 20-25% CAGR
10
billion
2014 €1.4 billion online sales*
Ambition 2017 €2.5 billion online sales*
Peapod Albert Heijn Online bol.com
€1.4
Peapod Albert Heijn Online bol.com
€2.5
*Estimated consumer sales includes sales from third parties (f.e. Plaza sales)
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Ahold has a unique set of strengths to win online
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Strong online brands in
dense urban markets
Easy and inspirational
online shopping experience
Broad range of high quality
products
Serving customers anyhow, anytime,
anywhere
Operational excellence in online
fresh food
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Ahold has a unique set of strengths to win online
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Strong online brands in
dense urban markets
Easy and inspirational
online shopping experience
Broad range of high quality
products
Serving customers anyhow, anytime,
anywhere
Operational excellence in online
fresh food
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Strong online brands with market leading positions
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• Five million active customers
• More than nine million items
• More than 4,000 merchant partners through our marketplace, Plaza
• Average items / order: 1.8
#1 online retailer in the Netherlands / Belgium
• Covers 84% of Dutch households
• More than 25,000 SKU’s
• Average items / order: 74
#1 online food retailer in the Netherlands (ah.nl)
• Covers > 50 million people, 17% of U.S. population
• 12-18,000 SKU’s
• Average items / order: 55
#1 online food retailer in the United States
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Customers love and trust our brands
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Top 100 most trusted Dutch brands (2013 IPSOS Brand Monitor)
1. 2. 3. 4. 5.
Top 100 most influential Dutch brands (2013 IPSOS Brand Monitor)
1. 2. 3. 4. 5. 6. 7.
#61 in U.S. Internet Retailer Top 500
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We operate in dense urban markets, which allows us to be profitable in home delivery • The Netherlands (404 p/km2) and Belgium
(361 p/km2) are both in global top 10 most densely populated countries.
• U.S. northern East Coast ranks as the 11th most densely populated global region in the world (450 p/km2), and is the most heavily urbanized region in the U.S.
• Our 25 years of online logistics experience makes us profitable on mature, dense routes
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persquaremile.com
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Ahold has a unique set of strengths to win online
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Strong online brands in
dense urban markets
Broad range of high quality
products
Serving customers anyhow, anytime,
anywhere
Operational excellence in online
fresh food
Easy and inspirational
online shopping experience
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Just in time personalization at bol.com
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AH.nl: tens of thousands of recipes, straight to list
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Peapod: One-click easy filters
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Leading, innovative technology capabilities
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Supply chain systems
Transportation Price management Web and mobile experience
Customer service systems
• Central replenishment systems (<1 day of inventory)
• Warehouse management systems with smart picking algorithms (>400 items / hr food picking)
• Automated optimized routing (84% full vans)
• Patented yield management real-time scheduling (fee / slotting)
• Driver mobile field technology - text alerts for ETA, arrival and pickup
• Automatic benchmark pricing
• Integrated pricing with stores, including zip code-level pricing in U.S.
• Personalized offers, valid off- and online
• Strong mobile interfaces (40%)
• Real-time personalized websites
• Intelligent search • Recipe integration • “Guess my order” • Top retail apps: Appie
#1 in NL; Peapod top 10 in U.S. InternetRetailer.com
• Advanced customer service systems supporting multiple centers and phone / web / Chatbot / email
• Track and trace • Sophisticated fraud
protection (low bad debt) Pr
oprie
tary
sys
tem
s H
R 1,000+ IT experts (Amsterdam, Utrecht, Chicago, Boston)
• Agile, autonomous teams, with state-of-the-art software development skills • Best-in-class application of big data concepts and techniques
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Ahold has a unique set of strengths to win online
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Strong online brands in
dense urban markets
Serving customers anyhow, anytime,
anywhere
Operational excellence in online
fresh food
Broad range of high quality
products
Easy and inspirational
online shopping experience
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Broadest range online in the Netherlands at bol.com • Grew from one to 26 categories from 1999 to 2014
• More than nine million products
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Broadest range through the premier Dutch marketplace
Key results to date:
• Over €100 mln third-party revenues
• One in six products sold via third parties
• Partner’s revenue typically increased by 10-30%
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Unique ranges of food products
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Own brand Own-brand sales: AH.nl 51% Peapod 30%
Quality and diversity in Fresh Fresh / frozen sales: AH.nl 47% Peapod 40%
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Ahold has a unique set of strengths to win online
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Strong online brands in
dense urban markets
Operational excellence in online
fresh food
Easy and inspirational
online shopping experience
Serving customers anyhow, anytime,
anywhere
Broad range of high quality
products
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Serving customers anyhow, anytime, anywhere - with unique omni-channel shopping options
Omni-channel customers are more loyal and spend >20% more vs. supermarket-only customers
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on average
+21%
Unrivalled delivery options 1. Broad store network 2. Home delivery 3. Pick-up points
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Omni-channel, cross brand shopping
• One loyalty card on- and offline
• Joint marketing programs
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Ahold has a unique set of strengths to win online
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Strong online brands in
dense urban markets
Easy and inspirational
online shopping experience
Broad range of high quality
products
Operational excellence in online
fresh food
Serving customers anyhow, anytime,
anywhere
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Operational excellence in fresh food, built on an omni-channel supply chain
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Simple inbound Efficient picking and transport
Best-in-class sourcing for on- and offline
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Contents
• Retail landscape
• Ahold’s online strengths
• Ahold’s online strategies for growth
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Ahold’s online strategies for growth
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More customers
Market share and market growth
More places
Well-positioned for geographical
expansion
More choices
Continue to expand quality, ranges,
value and choices for our customers and our partners
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More customers - significant opportunities for growth • Online market growth expected to be robust
in U.S. and NL
• Peapod: 2% share in best zip codes; average 0.5%
• AH.nl: 6% penetration in Amsterdam, 2.5% national
• 40% of our 5 mln bol.com customers bought only from one single category
• One out of two shoppers in the Netherlands
shops via bol.com, but only one out of five shoppers in Belgium
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0%
10%
0
500
1.000
1.500
2.000
2.500
3.000
2012 2013 2014E 2015E 2016E 2017E
Online sales* Online share of total*
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More places - we are well-positioned for geographical expansion
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Gradual expansion into Midwest; Indianapolis warehouse to open in 2015
Entering north / south NL end-2014 Will enter Belgium in 2015
Amsterdam
Rotterdam
Antwerp
Midwest
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More choices - for our customers
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# of SKUs at
10k 18k
NJ warehouse NY’s best
# of SKUs 0
5
10
15
20
25
30
1999 2004 2009 2014
# of
cat
egor
ies
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More choices - for our partners
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What marketers are looking for:
• Higher ROIs
• Sufficient reach
• More personalization
• Richer product content and storytelling
• Closer to point-of-purchase
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More choices - for our partners
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National media reach: Netherlands
• #1 newspaper: 530k
• National news: 2 mln
• #1 women’s magazine: 375k
Ahold reach: Netherlands
• Albert Heijn stores: 14 mln visits / week
• Bol.com: 820,000 unique visitors daily
• Allerhande magazine: 2.7 mln readers
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In summary: we are well-positioned, and have vast opportunities for future growth
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We have leading online positions and
unique capabilities
We have clear strategies for growth:
more customers, more places, more choices
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Cautionary notice
This presentation includes forward-looking statements, which do not refer to historical facts but refer to expectations based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those included in such statements. These forward-looking statements include, but are not limited to, statements as to online growth and strategy, investments, omni-channel strategy, customer expectations and untapped media and marketing opportunities. These forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond Ahold’s ability to control or estimate precisely, such as the effect of general economic or political conditions, fluctuations in exchange rates or interest rates, increases or changes in competition, Ahold’s ability to implement and complete successfully its plans and strategies, the benefits from and resources generated by Ahold’s plans and strategies being less than or different from those anticipated, changes in Ahold’s liquidity needs, the actions of competitors and third parties and other factors discussed in Ahold’s disclosures. The audience is cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of these presentations. Koninklijke Ahold N.V. does not assume any obligation to update any public information or forward-looking statements in these presentations to reflect subsequent events or circumstances, except as may be required by law. Outside the Netherlands, Koninklijke Ahold N.V., being its registered name, presents itself under the name of “Royal Ahold” or simply “Ahold”.
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