The merger of Ahold and Delhaize has been effective since July 2016, resulting in one of the world’s largest food retail groups, servicing more than 50 million shoppers every week in 11 countries.
Hanneke Faber is Chief E-Commerce and Innovation Officer at Ahold Delhaize
, and she’ll be speaking at the Deutscher Handelskongress 2016 about the Ahold Dalhaize story, with a focus on digital innovation.
Leading up to the event, we had the opportunity to speak with Hanneke Faber about how she sees the future of online grocery shopping and what role “old school” bikes can play for innovation strategies!Hanneke Faber, digital transformation leaves no stone unturned in retail. What are the cornerstones of Ahold Delhaize’s digital strategy?Hanneke Faber:
“Our digital strategy is based on three pillars: e-commerce, digital personalization and omnichannel media sales.
E-commerce is the transactional channel. We have three strong brands in e-commerce:
, the no.1 online retailer in Holland and Belgium
, the no. 1 online grocery store in the United States and
• Albert Heijn
, the no.1 online grocery shop in Holland.
With those three brands we see very strong growth. That is an important sales driver for us as a company.
The second pillar of our digital strategy goes well beyond just e-commerce. We think big data and digitization allow for much more personalization of the shopping experience – and this includes shopping in our traditional brick and mortar supermarkets. We are increasingly using digital personalization in order to improve customer experience. In Holland, Belgium and the United States, millions of our customers regularly receive personalized offers from us. Most of these offers to save them money. However, sometimes they receive interesting offers, based on their data and their purchase behaviour, to try a new product or participate in a special promotion. They get extra benefits that other customers may not get.
This personalization drives really strong loyalty and incremental sales at all our brands and I believe we are just scratching the surface with this capability. Our big data analytics know-how is constantly improving and we’ll be doing a lot more in that area during the years to come.
The third area is interesting as well: omnichannel media sales. With our omnichannel business, we have access to and insight into millions of customers every day. Just in Holland, a country of 17 million, bol.com has 7 million active customers every month, and Albert Heijn, our stores, have 12 million people that walk through the door every week!
Our customers generate data with every purchase they make in our stores, which gives us insight into their preferences. This insight enables our companies to be an interesting media publishing platform for advertisers. That is not something that has been traditionally the role of retailers. But we are increasingly offering advertisers the opportunity to reach customers through our online and offline stores, right at the moment of purchase.
They find that a very interesting offer, and it has been a growing business for us as well.”
Considering e-commerce in food retail, we have yet to see a surge in the German market, while other European markets are more advanced in that field. How do you see the future of online shopping in the food market?
Hanneke Faber: “Germany is definitely a little behind when it comes to grocery shopping online. Why is that? If you look at some of the other markets around Germany, the UK is definitely furthest ahead, with almost 5 % of grocery sales made online. Holland and Belgium are somewhere in the middle, between 1 and 3 %, and Germany seems to be at the tail end.
From what we know, three things are driving the big penetration in the UK market.
The first is the “chicken and egg” theory, in fact. While the demand from customers is everywhere – people like to shop for groceries online – in the UK the supply has been there for many years, with the four major companies seriously getting into online grocery shopping: Tesco, Ocado, Sainsbury’s and Morrisons. When you have that kind of supply, it drives demand and your market grows.
The second thing in the UK is that they have almost 100% geographic coverage of home delivery of groceries. In Germany, I am sure there are many places where you cannot order your groceries online. Even in Holland and Belgium, that is still the case today.
Finally, in the UK, all the big players have a loyalty card. Like with Amazon Prime, you pay a certain amount and then your delivery is free for whatever period you bought the pass for. With more than 20% penetration, that drives the usage of the service.
I think that in the future, we’ll see those drivers in other places as well. We’ll certainly see the market here in Holland growing very fast for online grocery, as more supply comes online. Albertheijn.nl is by far the market leader. But there are also a number of competitors emerging in this area, which is a good thing for the segment as a whole. I think that will happen in Belgium, France and, eventually, in Germany as well.
The customer need is there, and someone at some point is going to address that need. We believe at Ahold Delhaize that we should be at the forefront of that need.”
Sustainability is an important aspect in your strategy. How can innovation and digital technology support your sustainability strategy?
Hanneke Faber: “Sustainability has a lot of different angles. We focus on promoting healthier eating, reducing food waste and creating healthy and inclusive work spaces. Those are the three focus areas in our sustainability strategy.
Innovation and digital technology can definitely play a key role in all those areas. Product innovation is very important for healthier eating. We are continuously trying to reduce sugar, salt, additives, so we can offer healthier alternatives to our customers. Packaging innovation is super important in reducing waste. We are continuously looking at new cooling systems in our stores based on more natural refrigerants, in order to reduce CO2 emissions. In the last 3-4 months, we opened a green energy facility. We are also implementing LED lighting everywhere.
Today, digital personalization is mostly focussed on saving customers’ money, with personalized promotion and pricing. We are certainly also working on personalized health: how can we help you, based on your data, to eat healthier? We already have some pilots in place. That is a real opportunity for the future.
Looking at e-commerce, transportation is an area where we need to continue to innovate. We are employing more electric trucks and delivery vans. In the city of Amsterdam, we have introduced bike delivery. There is congestion in downtown areas. We don’t want to introduce a whole lot more gas-powered vehicles for our delivery.
While bikes may not sound like the most innovative thing, sometimes bringing back stuff from the past is actually an innovation that can deliver great customer experience and help in realising our sustainability strategy.”
Meet Hanneke Faber in person at the Deutscher Handelskongress 2016 in Berlin - you’ll find the whole program and registration link here.