Retailers

CEO Frans Muller Reflects on Ahold’s 2021 Performance, Future

Offers insights on the company’s diversity and inclusion efforts, technology investments and more
Ahold Delhaize
Photograph: Shutterstock

Ahold Delhaize, which ended 2021 on a strong note with positive fourth-quarter comparable sales momentum and stable group margins, released its 2021 annual report on March 2, offering a further look at the company’s performance in 202, with insights from CEO Frans Muller.

In the report, Muller reflects on the pandemic, the company’s diversity and inclusion efforts, its investments in technology and its climate goals, while providing a glimpse of what to expect from Ahold in the year ahead. Following are key highlights from Ahold's self-analysis.

Pandemic Effects

Ahold Delhaize’s approach to the pandemic has been driven by its commitment to maintain a stable food supply chain, provide a safe shopping environment for customers and associates, and support its communities, the company said in its 2021 report.

However, Muller noted that “in many ways, this second year of the pandemic has been more challenging for people across our brands’ markets.”

“In 2020, everyone rallied around the crisis, and associates were motivated by our essential role in giving customers access to products in the safest possible way. As the pandemic continued in 2021, people became fatigued and we saw more mental strain, not only among associates but throughout the communities our brands serve,” he said.

In support of mental well-being, Ahold ran a pilot at its Global Support Office, providing tools to help associates recognize if they needed mental health support, as well as train managers on the important role they play.

The company also showed its support to communities, with its Hannaford banner in the U.S., for example, donating $400,000 to support mental health resources in its regions. Collectively in 2021, Ahold brands contributed more than $222 million in charitable donations to local food banks, national and private health systems, the Red Cross, medical facilities working on COVID-19 research and programs to feed first responders in critically hard-hit areas, it said.

Additionally, Ahold's pharmacies in the U.S. administered approximately 1.8 million COVID-19 vaccines across its Giant Food, Stop & Shop, The Giant Co., Hannaford and Food Lion banners.

Muller said Ahold spent nearly $400 million in 2021—on top of the nearly $755 million spent in 2020—on COVID-19-related costs, including extra measures in stores, sanitation, uniforms, signage, paid quarantine leave for U.S. associates and additional donations to communities.

“We saw other COVID-19 related challenges, such as inflation, which we did our best to manage and keep prices affordable to customers, and supply chain issues, particularly in the U.S.,” he added. “Through it all, our brands continued to build market share by enabling customers to shop when and where they wanted through our omnichannel offering and providing them healthy and sustainable choices.

Diversity and Inclusion Efforts

While Muller said Ahold still has much more progress to make in terms of diversity and inclusion (D&I), he noted that “D&I is embedded in our thinking and actions now in a way that it wasn’t in the past.”

He said he was proud to see “how associates learned from the lessons of the past two years around equity in society to double down on work towards our bold diversity and inclusion aspiration to be 100% gender balanced, 100% reflective of our markets and 100% inclusive.”

In 2021, the gender balance across all of Ahold was 53% female and 47% male. Breaking it down by levels, its VPs were 27% female and 73% male; directors 34% female, 66% male; managers 40% female, 60% male; and associated below manager level were 54% female and 46% male.

Ahold’s supervisory and management boards were predominately male in 2021, with 67% of the supervisory board male and 75% of the management board male.

• See also, “Retail Business Services, Ahold Banners Earn Perfect Score for LGBTQ+ Equality

Investments in Technology

Muller said Ahold “invested proportionally more in technology in 2021” than in the years before.

For example, in the U.S., Stop & Shop is offering customers “an enhanced, more personalized offering,” Muller said, through its GO Rewards program that lets customers earn points they can redeem for gas savings, dollars off at checkout or surprise deals.

Additionally, the Giant Co. in fourth-quarter 2021 opened an e-commerce fulfillment center in Philadelphia to help drive growth and efficiencies in online operations. Also in 2021, a 1-million-square-foot distribution center in Connecticut opened that Ahold said will enhance the supply to more than 450 Stop & Shop stores and e-commerce centers. In its 2021 report, Ahold said the U.S. brands are on track to open two new fully automated frozen facilities next year.

Ahold’s newest support brand, ADUSA Supply Chain, will also help expand its U.S. network and, by the end of 2022, will include 25 traditional distribution centers and food processing facilities and 28 e-commerce fulfillment centers, the company’s report said.

“In 2022 and beyond, we will step up our investments in digital, automation and state-of-the-art infrastructure to drive innovation and support our accelerated growth plans to 2025,” Muller said.

Demand for home delivery and click-and-collect services remained strong, as well, Ahold noted. At the end of 2021, almost 1,400 stores in the U.S. offered click-and-collect and the brands made online shopping available to customers in about 95% of their geographies. Ahold also grew its online offering in Europe by more than 25%, it noted.

Muller said Ahold invested nearly $2.7 billion in the business in 2021, “to make sure that our brands’ stores are well-maintained, to enhance the digital and omnichannel offerings, to upgrade the supply chain and to increase our IT and digital capabilities to make sure our brands can provide even more personalized propositions for customers.”

Ahold also closed on several acquisitions in 2021, including FreshDirect, 71 stores from Southeastern Grocers at Food Lion and 38 Deen stores at Albert Heijn.

Climate Targets

In 2021, Ahold announced accelerated targets on climate, including plans to reach net-zero carbon emissions across our own operations by 2040—10 years earlier than originally planned—and become net-zero businesses across its entire supply chain, products and services by 2050. This is on top of Ahold’s previous commitment to reduce emissions by 50% between 2018 and 2030, Muller said.

Ahold is also making efforts to reduce waste, “another very important way we are striving towards a healthier planet,” Muller said; however, those efforts have had its challenges.

“Like all food retailers, we underestimated the challenge of completely replacing our own-brand primary plastic packaging by 2025 with recyclable, reusable or compostable plastics. While we are committed to deliver a path of continuous improvement on this front, we also need to reevaluate a more realistic goforward ambition. Reducing plastic waste has proved to be challenging and complex, from the levels of recyclability of the multiple packaging elements themselves to the availability of a robust recycling infrastructure within some of our brands’ markets.”

Muller reported that Ahold has reduced total food waste in its business by 18% since 2016 and aim to lower it by 50% in 2030.

“Many of the challenges we faced during the year strengthened our commitment to our strategic ambitions. We saw a strong connection between the health crisis, natural disasters in many of our brands’ markets and the urgent climate crisis facing our world. As our brands helped communities deal with the pandemic and the aftermath of floods, fires, earthquakes and hurricanes, we doubled down on our commitment to our climate strategy,” Muller said.

Looking Forward

Muller expects 2022 to be another year of “relative uncertainty.”

“It’s difficult to predict how the COVID-19 pandemic and geopolitical situation in Europe will develop. We’ll do everything we can to help customers and communities stay safe and healthy, manage the impact of inflation on their wallets and keep our supply chain steady,” he said. “We will work hard to make further progress on our ESG ambitions and identify the next steps toward becoming a net-zero retailer. We also want to do our part to address inequality in the communities our brands serve and reach our aspiration to make our own company more diverse and inclusive.

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