Ahold E-commerce Hanneke Faber, Chief Commercial Officer - - PowerPoint PPT Presentation

Ahold E-commerce

Hanneke Faber, Chief Commercial Officer

Commerzbank, Frankfurt, May 12, 2016

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Content

• Introduction
• Global industry trends
• Ahold’s E-commerce strategy & plans

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Hanneke Faber – Chief Commercial Officer & Member of the Executive Board, Royal Ahold

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2015 sales

€38.2bn

Leader in sustainability A global top 25 retailer

E-commerce sales: €1.8B

‘’a global top 50 e-tailer” 1 restaurant.. ..combatting food waste

Millions of loyal customers in 3,253 stores 236,000

proud associates Strong and trusted consumer brands

2015

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Ahold 2015: Strong results in both the US and in Europe

US - 62% of sales Europe - 38% of sales

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Ahold announced intention to merge with Delhaize

• Merger completion expected mid 2016
• Ahold Delhaize will be a €60 billion, global top 10 retailer

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Content

• Introduction
• Global industry trends
• Ahold’s E-commerce strategy & plans

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Disruption: A combination of unmet consumer needs and new technology

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Highly Disrupted Industries

Photography Travel

• Developing pictures time-consuming
• Hassle to share pictures
• Digital cameras and smartphones
• Internet
• Social media
• Travel agencies require visits and waits
• Lack of independent advice
• Cancellation fees
• Internet
• Big data
• Artificial intelligence

1854 - Founded 1996 - 140K associates, Worth $31B 2012 - Bankrupt 2010 - Founded 2012- 13 associates; 1B takeover by FB 2015 - Valuation $35B "Our guests don't want the Airbnb feel and scent” 2007 - Founded 2012- 2Mio stays 2015 - >1M rooms Valuation >$10B

Established market leader Disruptor Unmet consumer need New technology

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Much of the Retail industry has been disrupted

Apparel Consumer Electronics The old: The new: % of total market online (2015):

• USA
• Holland
• Belgium

18% 15% 10% 25% 26% 12%

Source: US Census bureau and industry reports; Thuiswinkel Marktmonitor 2015, Kleding & Schoenen

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The Food retail industry has not been disrupted - yet

Source: SparkOptimus

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But it is unlikely Food Retail is in a ‘safe zone’

‘More value’ ‘Time is a luxury’ ‘Living better’

Unmet consumer needs

• Visit 3+ stores for groceries to get

best deals

• Being thrifty is seen as smart, even

cool – even for the well-off

• Grocery shopping takes time (store,

lines, payment etc.)

• Even online grocery takes time

(putting order in, wait at home for it)

• 43% of US consumers have picked

up a prepared meal at a grocery store in past month

• Obesity
• Healthy eating becoming a ‘moral

act’

• 65% wants to know more about

where food comes from (US, 2014)

• Uncertainty about what is really

healthy

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A disease on the rise (really)

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But it is unlikely Food Retail is in a ‘safe zone’

Price comparisons and 100% value transparency Tally is a retail robot that rolls around stores making sure shelves are stocked Microsoft Hololens enables you to interact with HD holograms in your world Amazon Dash is a smart reordering button Amazon’s delivery drone delivers packages <5 pounds within 30 minutes Predictive analytics ‘More value’ ‘Time is a luxury’ ‘Living better’

Unmet consumer needs

• Visit 3+ stores for groceries to get

best deals

• Being thrifty is seen as smart, even

cool – even for the well-off

• Grocery shopping takes time (store,

lines, payment etc.)

• Even online grocery takes time

(putting order in, wait at home for it)

• 43% of US consumers have picked

up a prepared meal at a grocery store in past month

• Obesity
• Healthy eating becoming a ‘moral

act’

• 65% wants to know more about

where food comes from (US, 2014)

• Uncertainty about what is really

healthy

Big data Artificial Intelligence & robotics Internet of things

New technology

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My new best friend (and my mother-in-law’s)

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Robotics

“…our grocery delivery robot will do for Grocery what Skype did for telephony” (co-founder Skype, Starship Technology CEO) In test in London and DC

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9,0% 10,0% 8,0% 16,0% 0,0% 2,0% 4,0% 6,0% 8,0% 10,0% 12,0% 14,0% 16,0% 18,0% US NL Be Most developed: China

Expected growth rate '16-20: + 10-15 % p.a.

1,0% 0,8% 0,4% 4-5% 0,0% 1,0% 2,0% 3,0% 4,0% 5,0% US NL Be Most developed: UK

Expected growth rate '16-20: + 20-30% p.a.

We expect strong E-commerce market growth in our geographies (Total and Food)

Source: combination of McKinsey, Euromonitor, Forrester, Ahold research

• Total E-commerce at ~9% of market now, expected to grow 10 -15% p.a. through 2020
• Food E-commerce smaller, but expected to grow faster (Holland grew +54% in 2015)
• > half of all retail growth will be derived from E-commerce through 2020
• China and the UK already have more developed e-commerce/food e-commerce markets today

E-commerce as % of total market - 2015 Food – e-commerce as % of total market - 2015

8% 16%

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Looking forward: what could our industry look like by 2020, and 2025?

Online as % of total

• weighted avg US, NL, Be

2015 2020 2025 Total retail:

@10-15% annual online growth

10 20 ~35 Food retail:

@25% annual online growth

1 3 ~9

@50% annual online growth

1 7.5 ~45

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Content

• Introduction
• Global industry trends
• Ahold’s E-commerce strategy & plans

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Ahold’s transformation to an Omnichannel retailer started >20 years ago

Late 1980’s: James Telesuper (now ah.nl) 2001: Peapod.com acquisition 2012: Bol.com acquisition

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Ahold e-commerce goals:

In 2014, we declared ambitious new goals: 20-25% annual growth; 2.5B by 2017

billion

2014

€1.4 billion online sales*

Ambition 2017

€2.5 billion online sales*

Peapod Albert Heijn Online bol.com

€1.4

Peapod Albert Heijn Online bol.com

€2.5

*Estimated consumer sales includes sales from third parties (i.e.,Plaza sales)

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We communicated investments in growth for 2015-2017

• €60

Incremental Million EBIT

Additional investments, primarily at Incremental impact on NL

• perating margin -/- c25 bps

in 2015

Investing in talent and capabilities

1,000+ IT experts (NL and US)

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…and shared our business model

Online grocery 2014 EBITDA in mature home delivery markets

2-3%

2014 EBITDA including investments in growth

c-/-2%

bol.com 2014 EBITDA

C3%

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Ahold E-commerce 2015 Sales results:

€ 1.8 billion (+23 % vs LY); record growth ‘Big 3’; +new projects

#1 online retailer in the Netherlands / Belgium

~ €300 million

#1 online food retailer in the Netherlands (ah.nl)

~ $650 million

#1 online food retailer in the United States

~ €900 million + new pilots:

ah.nl

Gall.nl (Wine & Liquor) Ah.tmall.hk (AH on Alibaba, China) Instacart & Google Express pilots at Giant/S&S

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Strong 2015 Omnichannel results:

E-commerce delivered incremental growth, on top of strong traditional store growth

32.7 36.6 38.2

FY 2014 FX FY 2014 Week 53 Gas (ID) ID Sales (ex gas) Non-ID Sales (ex gas) FY 2015

Total sales growth at constant rates: 4.3%

ONLINE

In billion Euro’s

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…and Ahold’s most valuable customers shop both ‘Bricks’ & ‘Clicks’

Omni channel shoppers Store-only shoppers

More than double annual spend

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Ahold E-commerce: Strengths

Strong online brands in dense urban markets Easy and inspirational

• nline shopping

experience Broad range

• f high

quality products Serving customers anyhow, anytime, anywhere Operational excellence in online fresh food

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Ahold E-commerce: Strengths

Strong online brands in dense urban markets Easy and inspirational

• nline shopping

experience Broad range

• f high

quality products Serving customers anyhow, anytime, anywhere Operational excellence in online fresh food

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Strong brands with market leading positions

• 6.2 million active customers/month
• >10 Mio items for sale
• >10,000

marketplace partners (‘Plaza’)

• Average items / order: 1.8
• Winner 2016 Best Dutch Webstore

#1 online retailer in the Netherlands / Belgium

• Covers 86% of Dutch

households with Home Delivery

• 28,000 items for sale: larger

assortment than biggest AH grocery store

• Average items / order: 74

#1 online food retailer in the Netherlands (ah.nl)

• Covers > 50 million people,

17% of U.S. Population with Home Delivery

• Average items / order: 55
• Co-branded with supermarket

brands by region

#1 online food retailer in the United States

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Ahold brands operate in dense urban markets, which allows us to be profitable in home delivery

• The Netherlands (404 p/km2) and Belgium

(361 p/km2) are in global top 10 ‘Most densely populated countries.’

• U.S. North Eastern Seaboard ranks as the 11th

most densely populated global region in the world (450 p/km2)

• Our 25 years of online logistics experience

makes us profitable on mature, dense routes

Source: persquaremile.com

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Ahold E-commerce: Strengths

Strong online brands in dense urban markets Broad range

• f high

quality products Serving customers anyhow, anytime, anywhere Operational excellence in online fresh food Easy and inspirational

• nline shopping

experience

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Predictive analytics & personalization at bol.com

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Predictive analytics & Personalization

Exclusive personal offers on ah.nl

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AH.nl: tens of thousands of recipes, straight to list

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Peapod: One-click easy nutritional filters

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Leading, innovative technology capabilities

Supply chain systems Transportation Price management Web and mobile experience Customer service systems

• Central replenishment

systems (<1 day of inventory)

• Warehouse

management systems with smart picking algorithms (>400 items / hr food picking)

• Automated optimized

routing (84% full vans)

• Patented yield

management real-time scheduling (fee / slotting)

• Driver mobile field

technology - text alerts for ETA, arrival and pickup

• Automatic benchmark

pricing

• Integrated pricing with

stores, including zip code-level pricing in U.S.

• Personalized offers,

valid off- and online

• Strong mobile

interfaces (40%)

• Real-time personalized

websites

• Intelligent search
• Recipe integration
• “Guess my order”
• Top retail apps: Appie

#1 in NL; Peapod top 10 in U.S. InternetRetailer.com

• Advanced customer

service systems supporting multiple centers and phone / web / Chatbot / email

• Track and trace
• Sophisticated fraud

protection (low bad debt)

Proprietary systems HR 1000+ Omnichannel IT experts (Amsterdam, Utrecht, Chicago, Boston)

• Agile, autonomous teams, with state-of-the-art software development skills
• Best-in-class application of big data concepts and techniques

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Ahold E-commerce: Strengths

Strong online brands in dense urban markets Serving customers anyhow, anytime, anywhere Operational excellence in online fresh food Broad range

• f high

quality products Easy and inspirational

• nline shopping

experience

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Ah.nl/Peapod assortment: Unique ranges of food products

Own brand

Own-brand sales 2015: AH.nl 51% Peapod 31%

Quality and diversity in Fresh

Fresh / frozen sales 2015: AH.nl 49% (>stores) Peapod 40% (>stores)

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Ahold E-commerce: Strengths

Strong online brands in dense urban markets Operational excellence in online fresh food Easy and inspirational

• nline shopping

experience Serving customers seamlessly, anyhow, anytime, anywhere Broad range

• f high

quality products

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Seamless customer experiences:

Serving customers anyhow, anytime, anywhere Diverse delivery options

• 1. Broad store network
• 2. Home delivery (>90% of online orders)
• 3. Pick-up points

Ever more seamless shopping experiences

• 1. Omnichannel (personal) offers through popular

mobile apps and website

• 2. One omnichannel loyalty program
• 3. Easy payment
• 4. Free wifi in all stores

Contactless payment

(790 AH stores, 83%)

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Ahold E-commerce: Strengths

Strong online brands in dense urban markets Easy and inspirational

• nline shopping

experience Broad range

• f high

quality products Operational excellence in online fresh food Serving customers anyhow, anytime, anywhere

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Operational excellence in fresh food, built on omni-channel sourcing and logistics

Optimized transport, leveraging the Ahold network Highly efficient central picking Best-in-class sourcing for

• n- and offline

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Future Ahold E-commerce strategy:

More customers

Market share - and market growth

More choices

Geographic and brand expansion:

Home Delivery in dense urban areas, and Pick up

More places

Expand assortment and service options

& Most efficient

Best-in-Class fulfillment:

Expand and improve on current best models

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Summary

Omni-channel is at the heart of Ahold’s strategy We have leading

• nline positions

with a strong track record E-commerce has become an increasingly important aspect of

• ur business

We continue to invest to drive growth and create long-term value

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Cautionary notice

This presentation contains forward-looking statements, which do not refer to historical facts but refer to expectations based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those included in such statements. These statements or disclosures may discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to Ahold, based on current beliefs of management as well as assumptions made by, and information currently available to, management. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “plan,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “may,” “possible,” “potential,” “predict,” “project” or other similar words, phrases or expressions. This presentation contains Ahold forward-looking statements as to, amongst others, global industry trends, Ahold’s e-commerce strategy and plans and the intended merger between Ahold and Delhaize. Many of the risks and uncertainties relate to factors that are beyond Ahold’s control. Therefore, investors and shareholders should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the occurrence of any change, event or development that could give rise to the termination of the merger agreement, the risk that the necessary regulatory approvals may not be obtained or may be obtained subject to conditions that are not anticipated, failure to satisfy other closing conditions with respect to the transaction on the proposed terms and timeframe, the possibility that the transaction does not close when expected or at all, the risks that the new businesses will not be integrated successfully or promptly or that the combined company will not realize the expected benefits from the transaction, Ahold’s ability to successfully implement and complete its plans and strategies and to meet its targets, risks related to disruption of management time from ongoing business

• perations due to the proposed transaction, the benefits from Ahold’s plans and strategies being less than anticipated; the effect of the announcement or completion of the proposed

transaction on the ability of Ahold to retain customers and retain and hire key personnel and maintain relationships with suppliers and on their operating results and businesses generally, litigation relating to the transaction, the effect of general economic or political conditions, Ahold’s ability to retain and attract employees who are integral to the success of the business, business and IT continuity, collective bargaining, distinctiveness, competitive advantage and economic conditions, information security, legislative and regulatory environment and litigation risks, product safety, pension plan funding, strategic projects, responsible retailing, insurance and unforeseen tax liabilities. The foregoing list of factors is not exhaustive. Forward-looking statements speak only as of the date they are made. Ahold does not assume any obligation to update any public information or forward-looking statement in this presentation to reflect events or circumstances after the date of this presentation, except as may be required by applicable laws. Outside the Netherlands, Koninklijke Ahold N.V., being its registered name, presents itself under the name of "Royal Ahold" or simply "Ahold."

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