Dutch retailer Ahold emphasised the success of its value positioning after it posted an 11% rise in third-quarter operating profit.
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In a trading update this morning (20 November), Ahold posted operating profit of EUR262m (US$328.1m), up from EUR236m in the comparable period of last year.
In order to draw more customers into stores, Ahold has focused on lowering prices and improving its offering in both the Netherlands and US.
“It is clear from these latest results, and our gains in market share in both Europe and the US, that we are doing the right thing and customers are reacting well to our value offer,” a spokesperson for the retailer told just-food.
Pointing to the increase in net sales, which rose 3.9% to EUR5.8bn, Ahold said that its move to cut prices in order to drive volume growth was paying off. However, the company was also keen to emphasise that its offer is about more than just reduced prices.
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By GlobalData“Anyone can lower prices, but the great trick is the combination of factors that make an attractive offer to customers (lower prices, more convenient shopping, better product assortment, quality in fresh) and at the same time cutting costs so you can continually reinvest money in lowering prices,” the spokesperson said.
One area that has been important to Ahold’s mission to improve its value offering has been the expansion of its own-label offering. The spokesperson told just-food that Ahold is succeeding in its bid to expand own-brand sales.
“Private-label penetration in the Netherlands continues to grow, the total share of private label is well over 50%. Private label is a key element of our repositioining programmes throughout the company, and allows us to offer value to the customer at all price levels,” the spokesperson said.
The company also told just-food that it has already taken some steps towards addressing performance issues at its joint venture ICA. A weak performance in Norway, as well as lower gains from asset sales, hit the Scandinavian retailer and weighed on income from Ahold’s ventures, which tumbled 43.4% to EUR30m.
“Turnaround work in ICA Norway will take quite some time, it’s not an easy or quick fix,” the spokesperson said.
Ahold said that during the quarter it made a number of high-level appointments “to bring focus and experience to the issues we face”. Most notably, in August, Antonio Soares, former CEO of ICA’s subsidiary Rimi Baltic, was appointed the CEO of ICA Norway.
“An immediate action of the new team was to develop a new concept for Rimi that has already been tested in two pilot stores with a positive outcome. The new concept will be launched gradually in more Rimi stores,” the spokesperson revealed.
