Ahold Delhaize wants its local brands in the Benelux to strengthen each other better, to make online food sales profitable in the long run. The question arises: what should such cooperation look like concretely?
Online food remains loss-making
By 2025, e-commerce at Ahold Delhaize should not only double in turnover, but also become profitable. For its online platform bol.com, the latter is already the case: its gross operating profit is expected to rise to 150&nbs;to 170 million euros this year, on a turnover of 5.5 billion euros. However, online food sales at Delhaize and Albert Heijn remain loss-making. In terms of logistics, the delivery of (fresh) food is much more complex and, therefore, more expensive. Moreover, the margins in the highly competitive food market are minuscule.
Economies of scale and automation could be part of the solution, but the retail group believes that closer cooperation between the two supermarket chains and bol.com could also improve profitability in the long term. Even though there are major differences between food and non-food, greater synergy is still possible, European CEO Wouter Kolk explained on Monday at Ahold Delhaize’s (virtual) investor day.
Committing to cross-selling
What might such a collaboration look like in concrete terms? Kolk did not say much, but he is thinking of marketing initiatives such as a shared loyalty programme, where customers can save points or rewards across the different brands. He also wants to focus more on cross-selling: customers who order barbecue meats online from Delhaize, for example, would get an offer from bol.com on a barbecue set.
The company could also take the cooperation to a higher level in terms of logistics. Today, bol.com customers can already collect their parcels from Delhaize’s and Albert Heijn’s physical stores. Kolk wants to investigate whether the delivery vans used by both supermarket chains for delivering groceries can also be used to carry returns for bol.com. A pilot project is in the pipeline.
Balancing act
Some initiatives are already underway: for example, Delhaize customers have for some time been able to exchange their saved SuperPlus points for vouchers at bol.com. Recently, Albert Heijn launched the omnichannel subscription ‘Mijn Albert Heijn Premium’ in the Netherlands, which not only offers shoppers discounts in the supermarket but also at the group’s other brands, such as the Gall & Gall liquor stores or bol.com’s Select membership.
All of this will be a tricky balancing act, because the brands have to maintain their individuality – even within the Ahold Delhaize ecosystem. They are also often competitors on a local level – that is certainly the case for Delhaize and Albert Heijn in Flanders. But in the retail group’s growth ambitions, online plays a key role: by 2025, sales should grow from 75 to 85 billion euros, and half of that growth is to come from e-commerce. Hence the plan to float (a part of) bol.com on the stock exchange: this way, the group can raise additional capital to finance this growth. Currently, the stock market climate is not favourable for e-commerce players, but if Ahold Delhaize can prove that its online activities are profitable, it might change that trend. Although it will probably take more than a offer on barbecue sets…
