International Retailer
By: Heather Steinmetz
Topic
Slide
Company Profile
3-6
Pest Analysis
7-13
Industry Analysis
14-20
Competitor
21-32
Market Analysis
33-37
Internal/SWOT Analysis
38-47
Strategy Analysis
48-50
Conclusion
51
Recommendations
52
 International “Big
Box” retailer with
stores in the United States and Europe
 Established
 Ranked
in 1973
184th on the Fortune Global
500 in 2010
Drug /
Convenience
Store
Liquor Store
Local
Grocery
Store
Supermarket/
Hypermarket
Online
Grocer
Smaller store
with extended
hours selling a
limited variety
of food and nonfood products
Store selling
wine, liquor
and other
alcoholic
beverages
Store
selling
general
food and
non-food
products
Hybrid of a
grocery and
department
store that sells a
variety of
products
Store that
allows
customers to
purchase
groceries and
limited nongrocery items
online with the
option of home
delivery
Ahold International
Ahold U.S.A.
Ahold Europe
Location of HQ
Amsterdam, Netherlands
Quincy, MA
Zaandam, Netherlands
CEO/COO
Dick Boer
Carl Schlicker/Lawrence
Benjamin
Sander Van der Laan
# of Stores
2,970
751
2,219
# of Employees
212,240
115,993
96,247
# of Distribution Centers
66
-
-
Products and Services
Food, clothing, household goods, pharmaceuticals, liquor, health and beauty products, general
merchandise, jewelry, hardware and appliances. Post office kiosks, gas pumps and online grocery
ordering with home delivery service are also available.
Sales
E 30.3 Billion
E 17.8 Billion
E 12.5 Billion
Operating Income
E 1.4 Billion
E 714 Million
E 698 Million
Market Share
33.60%
-
-
Target Market
Competitors
Busy, on the go locals and families who want quick, friendly and knowledgeable service
Walmart, Carrefour, Delhaize
Safeway, Supervalue, Kroger
Metro AG
 Licensing

and Franchising laws- O/T
(O) Joint ventures and franchising in foreign
markets can be used to increase growth

(T) Countries such as the U.S. and China have
very specific regulation laws

The Global Economic Recession-T

Global Unemployment Rate – T

Rise in unemployment means less consumer spending
2010 Unemployment Rate
 Price
Increase on
commodities-T

Inflation for producers
increased faster than it
did for consumers
leaving the industry
with little to no pricing
power
 Improving
environmental footprints and
making operations more efficient-O/T
 Rise of health conscious consumers- O
Opportunity
Threat
Consumers are improving
their health and eating
habits more than ever
before
Making environmental
changes affects the supply
chain and can be costly
Stores that carry a variety
of health food and wellness
products have the
opportunity to increase
sales and gain new
customers

Rising health care
costs- O

Increase sales and
gain market share
since consumers are
spending more in
health products
 Online
retailing
increasing in the U.S.- O


Information obtained
by the internet can be
powerful sale drivers
The internet will target
larger audiences of
new and existing
customers
Factor
Trend
Political
Economic
Social
Impact
(1= low;
5= High)
Rank in
terms of
importance
Laws for entering and Opportunity/
exiting foreign
Threat
markets
1
4
Global economic
recession and
unemployment
Threat
3
3
Price increase in
commodities
Threat
4
2
Improving economic
foot-print
More health
conscious consumers
Rising health care
cost
Opportunity/
Threat
2
2
Opportunity
5
1
Opportunity
4
2
Opportunity
5
1
Technological Online retailing
increasing in the U.S.
Evaluation
Threat of
New Entry
Low
Bargaining
Power of
Suppliers
Low
Rivalry
Among
Firms
High
Threat of
Substitute
Products
High
Bargaining
Power of
Buyers
High
Nature Of Barrier
Low
Supply-side economies of scale
High
Demand-side benefits of scale
Moderate
Capital requirements
High
Incumbency advantages
independent of size
Moderate/High
Customer-switching costs
Low
Unequal access to distribution
channels
Low
Restrictive Government Policy
Moderate
 Large
retailers have a higher level of
power because they make large
purchases of product sold to them at a
lower price
 Suppliers
spread product in many retail
outlets so that it is easily available to
consumers
A
contract with a large retailer could
“make or break” a small size supplier
 High
number of buyers demanding highquality products at bargain prices help
keep retailers honest
 Low
switching costs: consumers can shop
for many products at similar prices at
competitor locations
 Buyers
are well informed about products
being offered by retailers and their
prices

Retailers tend not specialize in one good or
service

They sell many products and services to accompany all the
needs of the consumer

Retailers offering products that are unique can have a
distinct or absolute advantage over their competitors

Low switching cost


Retailers who build strong consumer brands can increase
market share
Focus on maintaining high quality and private
brand images

The industry is mature: slower market growth and
high competition for market share and growth
opportunities


Focus on new growth opportunities through
innovations in online retailing
Increasing trend in customer loyalty programs,
promotions and advertising: battle to provide the
highest value/lowest cost

Leading competitors are more equal in size and
therefore able to achieve similar results
BLUE OCEAN


RED OCEAN
Entry into online
grocery have allowed
expansions in
innovation

Internally Ahold is one
of few to switch to the
cloud-based business
suite from Google

Creation of smart phone
and tablet apps create
easier and more
convenient shopping for
customers
Cloud-based business
helps connect offices in
the U.S. and Europe

online collaboration
of documents ,video
conferencing , email,
calendars and more
Factor
Result
Leading competitors are equal in size and
producing same results
Low cost of switching
Mature Market
Pricing Strategies
Products offered can be found at most
competitor locations at similar prices
Creates high competitiveness for market
share during slow market growth
Leaders compete on offering low cost to
customers, every day low prices and
promotions and customer loyalty programs
Net Income
Sales
2009 Global Power
Market Rank
# of Stores
# of Employees
Carrefour
Metro AG
€ 437 Million
€ 519 Million
€ 85,963 Billion
€ 65,529 Billion
2
4
15,503 stores in
34 countries
2,068 stores in 33
countries
475,000
286,091
CARREFOUR
METRO AG
Europe
13,510
Europe
Latin America
1,275
Latin America
1,993
N/A
Asia
718
Asia
67
Africa
N/A
Africa
8
Most dominant county:
France: 5,440 Stores
Market Rank: 2nd
Most dominant country:
Germany: 958 Stores
Market Rank: 3rd
Net Sales in Millions
Net Income in Millions
€ 1,400
€ 1,400
€ 1,200
€ 1,200
€ 1,000
€ 1,000
€ 800
€ 800
Net Sales in Millions
€ 600
€ 400
€ 400
€ 200
€ 200
€-
Net Income in
Millions
€ 600
€-
2005
2006
2007
2008
2009
2005
Number of Stores
2,500
2,400
2,400
2,300
2,300
Number of Stores
2,100
2007
2008
2,200
Number of Employees
2,100
2,000
2,000
1,900
2005
2006
2007
2008
2009
2009
Number of Employees
2,500
2,200
2006
1,900
2005
2006
2007
2008
2009
Net Sales in Millions
Net Income in Millions
€ 1,400
€ 1,400
€ 1,200
€ 1,200
€ 1,000
€ 1,000
€ 800
€ 800
Net Sales in Millions
€ 600
€ 400
€ 400
€ 200
€ 200
€-
Net Income in Millions
€ 600
€2005 2006 2007 2008 2009
2005
Number of Stores
2,500
2,400
2,400
2,300
2,300
Number of Stores
2,100
2007
2008
2009
Number of Employees
2,500
2,200
2006
2,200
Number of
Employees
2,100
2,000
2,000
1,900
2005
2006
2007
2008
2009
1,900
2005
2006
2007
2008
2009
Assumptions
Objectives
Strategy
Resources
Profile of
Competitor
Competitor
Carrefour
Metro AG
Strategy

Cost Leadership

Increase sales private label

Positive market segmentation

Environmentally Responsible

Recover from global recession

Manage through economic downturn

Improve market share and growth

Promotional Campaigns
Competitor
Carrefour
Objectives


Open 22 new stores in China

Enter new markets such as India and re-enter Russia

Metro AG
Discount range: 400 everyday, quality products
(80% of products are food items)
Introduction of 2,000 Carrefour brand label
products: 152 Organic and Health

Sales +2.6%, international sales +5.4%

100 new store openings

Enter online retail business with innovative concepts

Introduced 3 new private label
 Real Bio: Organic
 Real Quality
 Real Selection
Competitor
Carrefour
Metro AG
Assumptions

Global economy will
continue to recover from
recession

Increase in consumer
income and spending

Increase customer loyalty
with private label brands

Resources


New entry in foreign
markets will gain market
share on competitors

Growing organic & health
market

Booming online retail
sales

Highly
committed and
qualified
customer
service reps and
associates
Advantages of
purchasing,
distributing and
marketing a
wide range of
products
Western Europe
markets

The global retail industry has a large variety of
competitors

Carrefour focuses on expanding their market share
in foreign markets and gaining ground on being
the “preferred” retailer world wide

Metro AG focuses on their three new private labels
and recovering from the recession and continue
their strong dominance in Western Europe

Global retailing market is is very
fragmented


Many segments included
Difficult to determine full scope and size
 Markets



are mature
Slow growth, compete on market share
U.S. retail sales: $244,887 Billion
Western Europe retail sales: €68 Billion and expect to
rise to €114 Billion in 2014
Demographics
Mothers ages 30-50
Health conscious shoppers ages 25-40
Income
Middle/Lower upper class
“Preferred Retailer”
Life-Style
On-the-go shoppers and families
Location
Suburban and metropolitan areas
Product Similarity
High
Price Preference
Offer lowest price for highest value
Brand Preference
Everyday Products- Medium
Organic Health Products- High
Desired Features
Convenience
Price
Quality
Quality
High
Size of purchase
Small to medium
Brand loyalty
Low
Purpose of use
Everyday items for survival
Personal pleasure
Purchasing behavior
Low involvement
Choice criteria
• Diverse selection
• Quality
• Price/Value
• Health/Nutrition
 Market
is very fragmented and divided into
multiple segments making it difficult to define
scope and size.
 Focus
 Meet
on low pricing and quality
the convenience and shopping needs of
consumers
 Trend
is moving towards online retail rather
than in-store
Allocate capital to new growth Increase sales to generate cash profits
to invest
• New Stores
• New Services
• Innovations
Lower cost base
Reducing costs and improving efficiencies
• Simplifying store operations
• Shrinking logistics
• Lowering energy usage & OH
Build strong brands
Delivering on promises to customers
•Provide Value
• Right offering of products
• Convenient shopping experience
Drive identical sales growth
Brand positioning
• Attracting new customers
• Increasing customer loyalty
Net Sales in Millions
Net Income in Millions
€ 28,500
€ 3,500
€ 28,000
€ 3,000
€ 27,500
€ 2,500
€ 27,000
€ 2,000
€ 26,500
Net Sales in Millions
€ 26,000
€ 25,500
Net Income in Millions
€ 1,500
€ 1,000
€ 25,000
€ 500
€ 24,500
€ 24,000
€-
2005 2006 2007 2008 2009
2005
Number of Stores
2006
2007
2008
2009
Number of Employees
4,000
250,000
3,500
200,000
3,000
2,500
150,000
2,000
Number of Stores
1,500
1,000
Number of Employees
100,000
50,000
500
0
0
2005
2006
2007
2008
2009
2005
2006
2007
2008
2009
Strengths
Weaknesses

Market leader in U.S. & Europe

Significant net income decline

Dominant market position

Product quality issues

Strong performance in The

Faulty ingredient labeling

Restructuring charges
Netherlands (Albert Heijn)

Market share= 31%

Value incentives

Cater to price sensitive customer

Increase identical sales

Declining revenue
Opportunities

Growing trend in private label
market

U.S. private labels sales project to
Threats

US & Europe economic recession

Decrease in demand for products

Increasing labor costs in U.S. &
reach $56 Billion by 2011
Europe

Cost cutting initiatives

Negatively effect profitability

Cost reduction program to enhance

Intense competition form other
operations

E- Commerce opportunities

Online retail boom in U.S.

Global rise in healthcare

Rise in over the counter sales
global retailers

Carrefour, Wal-Mart competing for
market share
Resources
Threshold
Resources

Threshold
Capabilities
Competencies
Threshold
Competencies
Customer

Innovation
satisfaction

Research &

Brand Image
Development

Corporate size

Marketing

Workforce

Recruiting
Resources
Threshold
Resources
Capabilities
for
Competitive
Advantage

Online retailing
Competencies
Threshold
Competencies

and delivery


Economies of
New store
openings

Partnerships,
scale
Licensing &
Foreign market
Franchising
expansion
 Ahold’s
business model for a long time
has been about providing consumers
with quality products at a low cost and
reasonable value.
 Ahold
should focus on the online sales of
Peapod during the online retail boom
 Continue
markets
R & D for entering new foreign
€ 30,000
€ 25,000
€ 20,000
Net Sales in Millions
Giant/Carisle
€ 15,000
Stop & Shop/Giant-Landover
Albert Hypernova
€ 10,000
Albert Heijn
€ 5,000
€2005
2006
2007
2008
2009
Stars
Question Marks
High
Market
Growth
Rate
Low
Cash Cows
Dogs
Relative Market Rate
High
Low
Overall Cost Leadership
Differentiation
Broad
Competitive
Scope
Narrow
Cost Focus
Low Cost
Differentiation Focus
Competitive
Advantage
Higher Cost
Differentiation
High
4
3
Perceived
product/service
benefits
Hybrid
Low
Price 2
Risky
6 High
Margins
No 1
Frills
Low
Focused
Differentiation
5
Loss of
8 Market
Share
Price
7
Monopoly
Pricing
High
 Hybrid


Good quality and value at a reasonable price
Low price due to

Economies of scale

Buying in bulk from suppliers
 Differentiation

Private label brands

Customer Loyalty Programs
Innovation
Ahold uses innovation to ensure the
continuation of offering great products
services and store formats
Market Development
Strategies are tailored to current markets and
change with customer wants and needs
Market Penetration
Allocate capital for acquisitions in new and
existing markets
Product Development
Increased marketing in private label brands
and customer loyalty programs to provide
better value to customers
Research and Development
The expansion of private label brands and new
growth opportunities will require Ahold to
continue R & D
 Market

is vary fragmented
Multiple segments difficult to determine size &
scope
 New
trend towards online retailing
 Global
economy still recovering from recession
 Low-cost
of switching and large numbers of
buyers compared to retailers intensifies
competition

Focus on private label brands to increase customer
loyalty in the competitive industry

Quality products for low cost/better value
 Act on competitive advantage in online retail with
online grocer Peapod and delivery service
 Continue gaining market share


Entry in foreign markets

Franchising
Model stores to meet customer needs and
expectations

Convenience