Wal-Mart vs Ahold
Mirjana Uzelac
Neda Kovacevic
Mónica Pérez
Corporate Intelligence
United Business Institute
December 2003
1
History

Wal-Mart
1962 Company founded with opening of
first Wal-Mart store in Rogers, Ark.
1972 Listed on New York Stock Exchange
1979 Wal-Mart reaches $1 billion in sales
1983 First SAM'S CLUB opened
1987 Wal-Mart Satellite Network completed
1988 First Supercenter opened
1990 Wal-Mart becomes nation's No. 1
retailer
1991 International market entered: Mexico
1995 Argentina and Brazil
1996 China in a joint-venture
1997 Wal-Mart No. 1 employer in the U. S.
1998 Germany, Korea in a joint venture
1999 Largest private employer in the world
1999 United Kingdom
2

Ahold
1887 Albert Heijn takes over his father’s
small Zaandam grocery store
1911 First Albert Heijn brand name products
sold
1948 Ahold on Amsterdam stock exchange
1973 Founding Ahold N.V. for international
growth
1977 In U.S. for the first time
1987 Queen Beatrix awards Ahold “ROYAL”
1990 Goes to Czechoslovakia
1992 Portugal
1995 New distribution system: store delivery
in 18h
1996 Singapore, Thailand, China, Spain,
Poland
2000 Acquired U.S. Foodservice
2003 Big financial scandal
Getting Ahold of Things
The fraud was simplicity itself. Food manufacturers
frequently pay a fee to supermarket operators to
encourage them to buy in bulk and then to promote the
products to the ultimate consumers. These promotional
allowances typically are a function of the volume
purchased. The company then aggressively accounted for
these promotional allowances, but did not have the
volume to justify their recognition. Prematurely and
incorrectly recognizing these promotional allowances of
course increased their profits for some 500 million euros.
3
Competitive Fact Sheet
Wal-Mart
Mission/
Vision
Strategy
To give ordinary folk the chance to
buy the same thing as rich people.
Serve the needs of our customers
by integrating a close-knit family of
world-class food retail and
foodservice operations that make
the whole of our company worth
more than the sum of its parts
1. Respect for the individual
2. High standards of service
3. Constant strive for excellence
1. Re-engineer food retail
2. Recover U.S. Foodservice
3. Reinforce accountability, controls
and corporate governance
4. Restoring Ahold’s financial help

Activities
4
Ahold
Low prices, In-stock positions,
Customer service
1. Food retail
2. Non-Food retail
3. On-line food retailer
1. Food retail
2. Food distribution (U.S. Food
service)
3. Liquor, beauty care stores
4. On-line food retailer
Wal-Mart vs Ahold
Wal-Mart
Ahold
$244,524
$59,267
1-Year Sales Growth
12%
-1%
Grocery Sales (%)
34
84
Domestic Sales (%)
84
15
Foreign Sales (%)
16
85
1,383,000
270,739
1.2%
(15.5%)
2002 Sales (mil)
2002 Employees
1-Year Employee Growth
5
Wal-Mart presence in Europe
6
Wal-Mart Subsidiaries in EU
UK
250 stores
Asda, Wal-Mart
Germany
95 stores
Wal-Mart
7
Ahold Presence in Europe
8
Ahold Subsidiaries in EU
Spain
623 stores
Supersol, HiperDino, Netto,
HiperSol, Cash Diplc
Slovakia
2 stores
Hypernova
Portugal
198 stores
Pingo Doce,
Feira Nova
Denmark
12 stores
ISO
Poland
165 stores
Albert, Mega,
Hypernova
Norway
1,104 stores
Rimi, ICA, Maxi
Netherlands
2,333 stores
Albert Heijn, Etos, De
Tuinen, Jasmin, Gall&Gall,
C1000, Ter Huurne
9
Czech Republic
203 stores
Albert, Hypernova
Lithuania
38 stores
Rimi, Eko
Sweden
1,846 stores
Rimi, ICA, Maxi
Estonia
3 stores
Rimi
Latvia
26 stores
Rimi, Maxi
Sector Trends for next 5 years




10
Diversification
Globalization
Strong Retailers
Technology
Sector Trend: Diversification

The maturity of the food market has led supermarkets
to look for new opportunities:




11
non-food1
discount format1
e-commerce2
expansion abroad2
Sector Trend: Diversification2


But almost all have ignored the rise of wholesale food
and drink trade
However, it is the most interesing retail sector :




12
percentage of consumption of food and drink in places other
than homes has risen compared to the total consumption:
1995
2000
2005
2025
32%
35%
38%
50%
demographic change: increase in the proportion of older,
wealthier people in the population
higher wholesale margins
Wholesale demand from the food service segment
increases by 4% to 5% a year across Europe,
compared with growth in retail demand of 1% to 2%.
Sector Trend: Diversification
Wal-Mart
13
Ahold
1. Non-food
Tire & Lube Express, WalMart Optical, Wal-Mart
Pharmacy, Wal-Mart
Vacations, Wal-Mart's
Used Fixture Auctions
Ethos, Gall & Gall
2. Discount
format
Wal-Mart Stores, Bodega,
Todo Día
RIMI, Netto, Balaio
3. E-commerce
WalMart.com
Peopod, ICA
4. Wholesale
Sam’s Club
Deli XL, Shuitema
5. Expansion
abroad
12 international locations
27 international locations
Sector Trend: globalization3

The consolidation and internationalisation of the food
retail can be expected to continue.



4 or 5 large retail organizations will operate on a worldwide scale,
a number of dominant regional and national retailers will exist,
the traditional small supermarket is approaching the end of its
lifecycle.
40
30
Market Share of top 5 Retailers
in the EU (Carrefour, Metro,
20
Tesco, Rewe, Intermarché)
Source: Lebensmittel-Zeitung 2002
10
0
14
1991
1994
2000
2005
IGD Global Retail Index1
Rank
GRI
Rank by
Turnover
1
2
Carrefour
2
3
Ahold
3
1
Wal-Mart
4
5
Metro
5
7
Tesco
6
8
Ito Yokado (inc. 7 Eleven)
7
20
Casino
8
17
Auchan
9
21
Delhaize
10
13
Aldi
11
10
Costco
12
18
Tengelmann (inc. A&P)
Company
Source: IGD Research - Date published 04/02/03
15
Global Status
Leading Global
Retailers
Leading International
Retailers (nearly
global)
IGD European Retail Index
Competitive Positioning1
100
80
60
40
20
0
0
10
20
30
40
Carrefour
Auchan
Tesco
Ahold
Rewe
Wal-Mart
Metro
Lidl & Schwarz
Aldi
ITM
Casino
Leclerc
Nº of Countries
The IGD 'European Retail Index' gives a more accurate ranking of the region's top
30 retailers than those rankings traditionally based on turnover size alone.
16
Future Market Focus1
Countries
China
Wal-Mart
Ahold
P
Italy
Russia
Japan
P
Hungary
India
United States
P
Poland
Canada
P
France
17
United Kingdom
P
Germany
P
P
Sector Trend: Strong Retailers


18
The power of the retail sector will grow: retailers
are expected to rule the food chain in the coming
five years.3
Retailers are trying to present themselves as a
strong brand, but only a few will succeed.3
2003 Global Most Admired
Rank
Source: Fortune
19
Company
1
Wal-Mart Stores
2
General Electric
3
Microsoft
4
Dell Computer
5
Johnson & Johnson
6
Berkshire Hathaway
7
Procter & Gamble
8
IBM
9
Coca-Cola
10
FedEx
Wal-Mart Subsidiaries

Europe
Wal-Mart Germany
Wal-Mart UK
ASDA
20

Asia
Wal-Mart Korea
Wal-Mart China
SAM’S Club
The Seiyu

Americas
Wal-Mart Argentina
Wal-Mart Brazil
Wal-Mart Canada
Wal-Mart de Mexico
Wal-Mart Puerto Rico
SAM’S Club
Supermercados Amigo
Todo Dia
Bodega
Ahold Subsidiaries

Europe
Ahold Polska
Ahold Czech Republic
Ahold Slovakia
Ahold Supermercados
Albert Heijn
Schuitema
Etos
Gall & Gall
Deli XL
ICA AB
Jerónimo Martins
21

Asia
Tops
Tops Market Place

Americas
Stop & Shop
Giant-Landover
Giant-Carlisle
Tops
BI-LO
Bruno’s
U.S. Foodservice
Peapod
La Fragua
CSU
CARHCO
Bompreço
G. Barbosa
Disco
Sector Trend: Technology

Cooperation will become increasingly important1:



22
between manufacturers and retailers to improve the quality,
velocity and dynamics within the chain,
between stores to share best practices.
Technology strength will be a critical success factor
for retailers and manufacturers3
Technology Based Intelligence

Wal-Mart


23
Wal-Mart Satellite
Network (largest private
satellite communication
system in the U.S.)
radio-frequencyidentification (RFID)
tags—chips

Ahold


Sales Information
System
RS/6000 ® SP™ servers
Wal-Mart: SWOT Analysis
Strengths
Weaknesses

Scale
 Home market strong position
 Technological pionneers
 Focus on discount

Opportunities
Threats
Growing supercenter format
 Product diversification (food)
 New markets (EU, Asia)
 E-commerce


24
International presence and
profits
 Low penetration in EU
 Lack of international
experience
Too large too manage
 Internationalisation costs
 Union opposition
 Not present in large
communities
Ahold: SWOT Analysis
Strengths
Weaknesses

International experience
 Non-food, discount format,
wholsale, e-commerce
 Strong domestic presence
 Ability to integrate acquisitions

Opportunities
Threats
Diversification of format
 Diversification of products
 Acquisition of major EU
retailers
 Presence increase in Asia


25
No global brand
 Not in EU key markets (FR,
GB, D)
 Loss of investors confidance
 Scale vs Wal-Mart
Risk of joint-venture failure
 Strengthening Euro,
weakening dollar
 Too complicated to manage
 Wal-Mart position in the US
26
Sources
27
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1)
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2)
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3)

4)

5)
IGD Research, www.igd.com
The McKinsey Quarterly
Cap Gemini Ernst & Young, “The Changing Face of
the Worldwide Food Industry”
Tansaş, “Presentation of Food Retail Sector”,
www.tansas.com
www.hoovers.com