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

Ahold E-commerce Hanneke Faber, Chief Commercial Officer Commerzbank, Frankfurt, May 12, 2016

Content  Introduction  Global industry trends  Ahold’s E-commerce strategy & plans 2

Hanneke Faber – Chief Commercial Officer & Member of the Executive Board, Royal Ahold 3

1 E-commerce restaurant.. sales: € 1.8B ..combatting ‘’a global top 50 e-tailer ” food waste 236,000 Millions of loyal proud customers in 3,253 stores associates 2015 sales € 38.2bn 2015 Leader in A global top 25 sustainability retailer Strong and trusted consumer brands 4

Ahold 2015: Strong results in both the US and in Europe US - 62% of sales Europe - 38% of sales 5

Ahold announced intention to merge with Delhaize  Merger completion expected mid 2016  Ahold Delhaize will be a € 60 billion, global top 10 retailer 6

Content  Introduction  Global industry trends  Ahold’s E-commerce strategy & plans 7

Disruption: A combination of unmet consumer needs and new technology 8

Highly Disrupted Industries Photography Travel Established market leader 1854 - Founded "Our guests don't want the 1996 - 140K associates, Airbnb feel and scent” Worth $31B 2012 - Bankrupt Disruptor 2010 - Founded 2007 - Founded 2012 - 13 associates; 1B 2012 - 2Mio stays takeover by FB 2015 - >1M rooms 2015 - Valuation $35B Valuation >$10B Unmet consumer • Travel agencies require visits and waits • Developing pictures time-consuming need • Lack of independent advice • Hassle to share pictures • Cancellation fees New technology • Digital cameras and smartphones • Internet • Internet • Big data • Social media • Artificial intelligence 9

Much of the Retail industry has been disrupted Consumer Electronics Apparel The old: The new: % of total market online (2015):  USA 18% 25%  Holland 15% 26%  Belgium 10% 12% Source: US Census bureau and industry reports; Thuiswinkel Marktmonitor 2015, Kleding & Schoenen 10

The Food retail industry has not been disrupted - yet Source: SparkOptimus 11

But it is unlikely Food Retail is in a ‘safe zone’ ‘More value’ ‘Time is a luxury’ ‘Living better’    Unmet consumer Visit 3+ stores for groceries to get Grocery shopping takes time (store, Obesity needs best deals lines, payment etc.)  Healthy eating becoming a ‘moral   act’ Being thrifty is seen as smart, even Even online grocery takes time cool – even for the well-off (putting order in, wait at home for it)  65% wants to know more about  43% of US consumers have picked where food comes from (US, 2014) up a prepared meal at a grocery  Uncertainty about what is really store in past month healthy 12

A disease on the rise (really) 13

But it is unlikely Food Retail is in a ‘safe zone’ ‘More value’ ‘Time is a luxury’ ‘Living better’    Unmet consumer Visit 3+ stores for groceries to get Grocery shopping takes time (store, Obesity needs best deals lines, payment etc.)  Healthy eating becoming a ‘moral   act’ Being thrifty is seen as smart, even Even online grocery takes time cool – even for the well-off (putting order in, wait at home for it)  65% wants to know more about  43% of US consumers have picked where food comes from (US, 2014) up a prepared meal at a grocery  Uncertainty about what is really store in past month healthy Big data Artificial Intelligence & robotics Internet of things Tally is a retail robot that rolls Microsoft Hololens enables you to Price comparisons and 100% value around stores making sure shelves interact with HD holograms in your New technology transparency are stocked world Amazon’s delivery drone delivers Amazon Dash is a smart reordering Predictive analytics packages <5 pounds within 30 button minutes 14

My new best friend (and my mother-in- law’s ) 15

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 16

We expect strong E-commerce market growth in our geographies (Total and Food)  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 Food – e-commerce as % of total market - 2015 E-commerce as % of total market - 2015 Expected growth rate '16-20: + 10-15 % p.a. Expected growth rate '16-20: + 20-30% p.a. 18,0% 5,0% 16,0% 4,0% 14,0% 12,0% 3,0% 10,0% 8,0% 16,0% 4-5% 2,0% 6,0% 10,0% 8% 16% 9,0% 4,0% 8,0% 1,0% 2,0% 1,0% 0,8% 0,4% 0,0% 0,0% US NL Be Most US NL Be Most developed: developed: UK China Source: combination of McKinsey, Euromonitor, Forrester, Ahold research 17

Looking forward: what could our industry look like by 2020, and 2025? Online as % of total 2015 2020 2025 - weighted avg US, NL, Be Total retail: 10 20 ~35 @10-15% annual online growth Food retail: 1 3 ~9 @25% annual online growth 1 7.5 ~45 @50% annual online growth 18

Content  Introduction  Global industry trends  Ahold’s E-commerce strategy & plans 19

Ahold’s transformation to an Omnichannel retailer started >20 years ago Late 1980’s : 2001: 2012: James Telesuper Peapod.com acquisition Bol.com acquisition (now ah.nl) 20

Ahold e-commerce goals: In 2014, we declared ambitious new goals: 20-25% annual growth; 2.5B by 2017 Ambition 2017 2014 € 2.5 billion online sales* € 1.4 billion online sales* € 2.5 billion € 1.4 Peapod Albert Heijn Online bol.com Peapod Albert Heijn Online bol.com *Estimated consumer sales includes sales from third parties (i.e.,Plaza sales) 21

We communicated investments in growth for 2015-2017 Investing Incremental in talent - € 60 and capabilities Million EBIT Additional investments, 1,000+ IT experts (NL and US) primarily at Incremental impact on NL operating margin -/- c25 bps in 2015 22

…and shared our business model bol.com Online grocery 2014 EBITDA in mature home delivery markets 2-3% 2014 EBITDA 2014 EBITDA including investments in growth C 3% c -/-2% 23

Ahold E-commerce 2015 Sales results: € 1.8 billion (+23 % vs LY); record growth ‘Big 3’; +new projects ah.nl #1 online retailer in the #1 online food retailer in #1 online food retailer in Netherlands / Belgium the Netherlands (ah.nl) the United States ~ € 300 million ~ € 900 million ~ $650 million + new pilots: Instacart & Google Express Ah.tmall.hk (AH on Alibaba, China) Gall.nl (Wine & Liquor) pilots at Giant/S&S 24

Strong 2015 Omnichannel results: E-commerce delivered incremental growth, on top of strong traditional store growth 38.2 36.6 ONLINE 32.7 Total sales growth at constant rates: 4.3% FY 2014 FX FY 2014 Week 53 Gas (ID) ID Sales Non-ID Sales FY 2015 (ex gas) (ex gas) In billion Euro’s 25

…and Ahold’s most valuable customers shop both ‘Bricks’ & ‘Clicks’ More than double annual Store-only shoppers Omni channel shoppers spend 26

Ahold E-commerce: Strengths Strong online Easy and Broad range Serving customers Operational brands in inspirational of high anyhow, excellence dense urban online shopping quality anytime, in online markets experience products anywhere fresh food 27

Ahold E-commerce: Strengths Strong online Easy and Broad range Serving customers Operational brands in inspirational of high anyhow, excellence dense urban online shopping quality anytime, in online markets experience products anywhere fresh food 28

Strong brands with market leading positions #1 online retailer in the #1 online food retailer in the #1 online food retailer in the Netherlands / Belgium Netherlands (ah.nl) United States  6.2 million active customers/month  Covers > 50 million people,  Covers 86% of Dutch 17% of U.S. Population with Home households with Home Delivery  >10 Mio items for sale Delivery  28,000 items for sale: larger  >10,000  Average items / order: 55 assortment than biggest AH marketplace partners (‘Plaza’) grocery store  Co-branded with supermarket  Average items / order: 1.8  Average items / order: 74 brands by region  Winner 2016 Best Dutch Webstore 29

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 30

Ahold E-commerce: Strengths Strong online Easy and Broad range Serving customers Operational brands in inspirational of high anyhow, excellence dense urban online shopping quality anytime, in online markets experience products anywhere fresh food 31

Predictive analytics & personalization at bol.com 32

Predictive analytics & Personalization Exclusive personal offers on ah.nl 33