Over the past few months, Ahold Delhaize’s share had to deal with plenty of setbacks, mainly because of Amazon’s competition. Investor group VEB says the supermarket company has listed a few outcomes for the Belgo-Dutch group.
Experience with price wars
Over the past six months, Ahold Delhaize’s share has lost about 25 % of its value, with Amazon’s competition and its recent Whole Foods acquisition being the main culprits. Most of Ahold Delhaize’s turnover comes from the United States and with Amazon’s announcement to permanently lower Whole Foods’ pricing, VEB forecasts several somber paths.
The organisation thinks there are two ways a price war could end: it could pose a problem for Ahold Delhaize, considering margins for its American subsidiaries are much lower than in the Netherlands. American prices are already under a lot of pressure because of discounters and the Whole Foods’ price cut will only make matters worse. On the other hand, Ahold Delhaize has been through plenty of price wars in The Netherlands and always came out on top. It also does not only need to look at Amazon and Whole Foods: if it can gain market share from other chains, it could also benefit.
Online surge
Amazon mainly poses an online threat and Ahold Delhaize has plenty to lose there, seeing how Peapod is one of America’s largest online grocery services. Whole Foods presents a giant leap forward for Amazon, because its product range could be added to Amazon’s online range. Amazon Prime subscriber discounts could also lure away a lot of consumers.
Amazon’s online grocery move could however also be good news for Ahold Delhaize, because supermarket chains currently only generate small amounts of turnover with online sales. Amazon could help create a breakthrough for other chains, helping them to reap the benefits in the long run.
In short, VEB admits things will remain to be seen. There is enough room for both Amazon and Ahold Delhaize, but the Dutch-Belgian company will have to fight for its spot. If the past has shown one thing, it is that the supermarket company is quite capable to adapt to an evolving market.
