Taking Stock

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Ahold Delhaize CEO Boer Says Stores Need To Be ‘More Exciting;’ He Should Look In His Own Mirror

I’ve devoted a lot of space in this column over the past four years to analyzing the largest supermarket chain in the Northeast – Ahold USA. I’ve praised them when I feel it’s been merited (Project Thunder, strong earnings results) and criticized them about issues relating to culture and the company’s seeming indifference to improving the customer engagement experience as it relates to labor staffing and associate training at its more than 700 stores.

So, I was surprised to read a Bloomberg interview with Ahold Delhaize (AD) chief executive Dick Boer in which he calls for his total fleet of more than 2,000 stores (including Food Lion and Hannaford) to become more exciting places to shop.

“The shopping environment needs to be easier, less complex and more entertaining,” Boer affirmed.

He added that Ahold Delhaize may add restaurants and other gathering spots to its stores. That’s a wonderful vision in theory, but Boer needs a moment of deep introspection if he believes that any of the Ahold Delhaize banners (at least in the U.S., which commands 60 percent of total AD business) are currently anywhere close to being “exciting” shopping experiences.

In fact, I’d argue the opposite. With the company’s current synergy integration ongoing, morale has never been worse in the 35 years I’ve been tracking the organization. And despite glowing self-praise on how the Ahold Delhaize merger would increase productivity, efficiency and buying power, I have yet to hear any Ahold Delhaize executive utter a word about how the company is going to improve the customer shopping experience. If company leaders believe that by decentralizing its brands (divisions) it will make for an improved (dare I say it), more exciting shopping trip, I want a sip from that glass of Kool-Aid.

Perhaps an epiphany is coming. Dick Boer is an exceptionally bright man who has helped make the company even more profitable since he became CEO in 2011. Maybe we’ll all be surprised that when January 1 rolls around and the integration plan is complete, Ahold Delhaize will then devote capital to improving its stores while also displaying more sensitivity towards its associates.

As it stands now, the Ahold USA stores look more vanilla than ever. In fact, if you blindfolded me and led me into a Stop & Shop store in Providence, RI, or a Giant/Martin’s store in York, PA, or a Giant/Landover store in Columbia, MD, it would take me a few minutes to determine which banner I was visiting.

And if Boer is envisioning adding restaurants to its nearly 1,100 Food Lion stores (the largest banner in the AD portfolio in terms of store count), I’d suggest hooking up with Hardee’s.

As the largest supermarket merchant in the Northeast with the best physical locations, Ahold USA should be hitting it out of the park. And from an earnings measure, profits have been strong; but top line numbers should be far better.

And once 2019 arrives and those one-time synergy savings are digested, then Ahold Delhaize will actually have to sell more stuff. Adding restaurants and other gathering spots is a great springboard towards making the shopping experience more enticing, but what Boer and his leadership team really need to focus on is how to make today’s Ahold Delhaize customer more satisfied.