Ahold Key Facts

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Ahold Key Facts

• 30 million customers every week
• Sales approaching 65 USD billion
• 4,500 stores in 25 countries on 4 continents
• 350,000 associates

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THE EMERGING RETAIL LANDSCAPE

• WINNERS LOSERS

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U.S. Retailing competition from several
channels
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Research Design

• Date Source 61,500 member ACNielsen Homescan?
  Consumer Panel
• Primary Channels
• Grocery (excluding Supercenters)
• Mass Merchandiser (excluding Supercenters)
• Supercenters
• Drugstores
• Warehouse Clubs
• Dollar Stores
• Convenience/Gas

Includes Kmart, Target Wal-Mart Supercenters
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Warehouse Clubs, Supercenters, Dollar Stores
Convenience/Gas continue expansion

• Family Dollar Dollar General

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More large Supermarkets
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Petro outlets offset declines in Convenience
chains
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Grocery Mass losing trips
Impacted by pace of life, competition from
restaurants, other retail channels too!
Includes Kmart, Target Wal-Mart Supercenters
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Key Industry Trends
Channel Grazing Increased competition for Rx
sales Gasoline retailing Frequent shopper
program Demand for convenience Niche retailing
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A new concept Channel Grazing

• Clear evidence that consumers take advantage of
  their channel options
• But how many retailers or retail channels do
  consumers include in their shopping mix?
• Any differences in shopping behavior among light
  versus heavy grazing households?
• Does grazing differ by household composition?

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A new concept Channel Grazing

• Over 900 national, regional, local retailers
  retail channels monitored via Homescan panel
• Households who shopped in 1 to n retailers
  were placed into three groups to define
• Heavy grazers shopped in over 28
  retailers/retail channel per year
• Medium grazers shopped in 19-27
  retailers/retail channel per year
• Light grazers shopped in 18 or fewer
  retailers/retail channel per year

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Channel Grazers drive retail sales
Total U.S. - 52-wks ending 12/29/01 All Outlets
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Channel grazing prevalent in more
populated counties
More grazers where there is more variety
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Total U.S. - 52-wks ending 12/29/01 All Outlets
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Channel grazing prevalent among couples
families w/older children
Total U.S. - 52-wks ending 12/29/01 All Outlets
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Except for Convenience/Gas, females dominate
channel shopping trips
As males age, they handle increased share of
trips
Total U.S. - 52 wks ending 12/29/01
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Higher basket values forFemale shoppers
Total U.S. - 52 wks ending 12/29/01
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Increased Rx competition did you
know?

• Rx sales rose 18 to 208 billion in 2001
• Doubling sales from 5 years ago
• Mass sales grew 23 to 8 billion
• Supermarket sales grew 16 to 18 billion
• Mail order Rx sales will surpass sales in
  Independent Drug Stores in 2002

Source Drug Store News
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Gasoline retailing did you know?

• Share of gasoline sales from high-volume
  retailers is expected to grow from 5 to between
  15 20 within four years
• Costco testified at a recent public
  hearinglocations with gasoline have a
  customer-repeat frequency of four times per
  month. Locations without gasoline have a repeat
  frequency of one time per month.

Source NACS
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78 of U.S. households participate in a Grocery
Frequent Shopper ProgramBut, 63 are in multiple
programs!
Source ACNielsen Homescan surveys
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Competition for Convenience
Dual working households, less time for preparation
Improved shelf life, refrigerated, convenient
products..
Consumers told us that if it's not easy, it's
not eaten.
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Convenience Still Competes

• Old Fort Travel Plaza in Ft. Wayne, Indiana added
  delivery of just about anything (detergent,
  cigarettes, milk, etc.) along with their normal
  pizza deliveries
• This was driven by
• increased competition from Kroger Wal-Mart for
  gasoline sales
• You cannot compete with them on price. They can
  sell gas at 25 cents a gallon and make it up
  selling lawnmowers.
• Store owner expects to add another 25 on top of
  their normal pizza sales drive other
  foodservice sales

Source NACS Magazine March 2002
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Niche Retailing

• Wild Oats is the 2nd largest natural
  supermarket
• chain in North America, with more than 100
  stores

• Whole Foods is the largest retailer of natural
  and organic foods, with 128 stores

• EatZi is a bakery, a market a restaurant with
  catering services for all occasions

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Summary

• Consumers take advantage of channel options
• Grocery channel shopping frequency continues
  decline Mass declining too
• Dollar Stores Supercenters posting strong
  penetration gains
• Heavy category buyers purchase in multiple
  channels Heavy grazers drive retail sales

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Summary

• The demographics shopping behavior of channel
  shoppers varies by channel
• Successful Retailers will use this knowledge to
  target growth via advertising, merchandising and
  promotional activities
• Successful Manufacturers will help Retailers and
  themselves with channel-specific targeting of
  products and promotions

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Summary

• Retailers
• Alternative channel retailers are coming after
  your shoppers their shopping trips
• invest dollars to re-invent yourselves!
• Focus efforts against core/heavy shoppers
• expand products services to capture greater
  share of spending
• frequent shopper programs need to be more than
  just another deal
• Initiate efforts to increase loyalty among key
  occasional or light shoppers

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Offerings that progressive retailers are using to
re-invent themselves

• Drive-thru Drive-up
• Indoor food courts
• Outdoor cafes
• On-site gasoline pumps
• Book sections w/seating
• Leveraging food categories to drive frequency
  ring
• On-line ordering home delivery
• Self check-out counters
• In/Out specialty items

• Enhanced wine sections
• Floral departments
• On-site banking other financial services
• Health Food Health Care sections
• Cooking classes
• Department Store cosmetic counters
• Child care facilities
• Good tasting variety of prepared foods
• Photo Processing

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Summary

• Manufacturers
• Capitalize on the channel shopping diversity of
  heavy category buyers through expanded
  distribution
• if you dont a competitor will!
• Expand through tailored product offerings, not
  through increased distribution of existing
  offerings
• match product offerings w/channel demographics
  and/or channel shopping behavior

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