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Ahold Delhaize’S Report Card

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Ahold Delhaize’S Report Card Navigating the Northeast Grocery Market John Rand, Senior Vice President Elley Symmes, Analyst September 2017 Copyright © 2017 Kantar Retail. All Rights Reserved. 501 Boylston St., Suite 6101, Boston, MA 02116 T: +1 (617) 912 2828 [email protected] Notice No part of these materials may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photography, recording, or any information storage and retrieval system now known or to be invented, without the express written permission of Kantar Retail. The printing of any copies for backup is also strictly prohibited. Disclaimers The analyses and conclusions presented in these materials represent the opinions of Kantar Retail. The views expressed do not necessarily reflect the views of the management of the retailer(s) under discussion. These materials are not endorsed or otherwise supported by the management of any of the companies or organizations discussed herein. Kantar Retail © 2017 2 Agenda Exploring the Northeastern Retail Landscape Checking In On The Merger: Ahold Delhaize’s Report Card Ahold Delhaize: Defending Against Its Northeast Threats Bringing It All Together: What’s Next for Ahold Delhaize Kantar Retail © 2017 3 Exploring the Northeast Retail Landscape 4 Families With Children Have Declined in Numbers Trends diverge between Hispanic and non-Hispanic families ‒ Total number of families with children under 18 peaked in 2007 and has Families With Children Under 18 decreased 4.0%. (Numbers in thousands, percentage change from 2007-2016) 2007 2016 ‒ After a double-digit increase from 2007 to 2016, Hispanic families are now 22% of all families with children -9% under 18. ‒ The number of non-Hispanic families with children under 18 has decreased sharply since 2007 32,791 29,957 +16% 7,192 8,319 Non-Hispanic Families Hispanic Families Note: Hispanic households may be of any race. Families are married, unmarried, or single-parent families with at least one joint child under 18. Source: U.S. Census Bureau, Kantar Retail analysis Kantar Retail © 2017 5 Job Growth Is Slower in the Majority of States in H1 Relative to 2016 West and Southeast lead, while low commodity prices are drag on the Midwest ‒Job leaders in order of strongest growing are: Nevada, Utah, States by Job Trends# Florida, Idaho, and Georgia Leading Average Lagging Declining ‒Job laggards are growing but well below average: Mississippi, Louisiana, North Dakota, Connecticut, and Illinois are lagging the furthest behind. ‒Job declines in a handful of states are due to low oil prices: Wyoming, Alaska, West Virginia, Oklahoma, and Kansas ‒Texas is notably one of the job leaders due to surging growth in Dallas and Austin. Houston is recovering after posting lagging growth in 2016 due to low oil prices. ‒Automobile-producing states should be watched: Ohio has been hit by job losses in the auto sector as automobile sales level off and inventories remain well above historical averages. Other auto-producing states — Michigan, Indiana, Kentucky, and Alabama — remain resilient for now. # Categories are based on year-to-year job growth for the six months through June 2017. Leading are the top 16 states. Lagging and declining are the bottom 16 states. Average is all other states. Source: U.S. Department of Labor, Kantar Retail Kantar Retail © 2017 6 The Largest Metro Markets Tend to Lead Job Growth It also suggests rural areas and most smaller cities are lagging States and Top 50 Metro Markets by Job Trends* ‒Orlando, Nashville, Atlanta, Jacksonville, and Dallas are the fastest Lagging Declining growing in the top 50. Notably, four of the five are in the Southeast. Leading Average ‒Thirty of the 50 biggest metros are posting growth that is at least as strong as the top 16 leading states (+1.8%). ‒Thirty of the 50 biggest metros are posting stronger growth than the average in their state or bi-state areas. This indicates these largest markets are magnets for jobs and retail sales growth not just relative to the national average, but also relative to the exurban and smaller cities in their area. * Categories are based on year-to-year job growth for the six Metro markets labeled by months through June 2017. State job growth includes that of biggest to smallest job metro markets within the state. Leading are the top 16 states and market among top 50 and metro markets posting at least 1.8% job growth. Lagging and colored by growth declining are the bottom 16 states and metro markets posting category. See slide 25 for below 1.1% job growth. Average is all other states and metro market name. markets posting job growth between 1.8% and 1.1%. Source: U.S. Department of Labor, Kantar Retail Kantar Retail © 2017 7 Top 50 Metro Markets Are 60% of the Job Market and Growing Leading Average Lagging Declining Year-to-Year Index to Year-to-Year Index to Growth Lead Growth Lead Metro Market Last 6 Months Growth* Metro Market Last 6 Months Growth* 1 New York-Northern New Jersey-Long Island, NY-NJ-PA 1.4% 79 26 Cincinnati-Middletown, OH-KY-IN 2.2% 120 2 Los Angeles-Long Beach-Anaheim, CA 1.4% 76 27 Kansas City, MO-KS Metropolitan Statistical Area 2.4% 135 3 Chicago-Joliet-Naperville, IL-IN-WI 0.8% 43 28 San Jose-Sunnyvale-Santa Clara, CA 1.8% 99 4 Dallas-Fort Worth-Arlington, TX 3.4% 190 29 Columbus, OH 2.0% 111 5 Washington-Arlington-Alexandria, DC-VA-MD-WV 1.6% 88 30 Cleveland-Elyria-Mentor, OH 0.8% 43 6 Houston-Sugar Land-Baytown, TX 1.2% 68 31 Indianapolis-Carmel, IN 2.2% 122 7 Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 1.9% 104 32 San Antonio-New Braunfels, TX 2.3% 125 8 Boston-Cambridge-Quincy, MA-NH NECTA 1.8% 100 33 Austin-Round Rock-San Marcos, TX 3.0% 169 9 Atlanta-Sandy Springs-Marietta, GA 3.6% 203 34 Las Vegas-Paradise, NV 3.3% 183 10 Miami-Fort Lauderdale-Pompano Beach, FL 2.5% 141 35 Sacramento--Arden-Arcade--Roseville, CA 1.6% 91 11 San Francisco-Oakland-Fremont, CA 2.4% 131 36 Nashville-Davidson--Murfreesboro--Franklin, TN 3.7% 204 12 Phoenix-Mesa-Glendale, AZ 2.5% 139 37 Milwaukee-Waukesha-West Allis, WI 0.1% 5 13 Detroit-Warren-Livonia, MI 2.0% 113 38 Virginia Beach-Norfolk-Newport News, VA-NC 0.1% 8 14 Minneapolis-St. Paul-Bloomington, MN-WI 2.2% 122 39 Salt Lake City, UT 3.1% 170 15 Seattle-Tacoma-Bellevue, WA 2.9% 160 40 Jacksonville, FL 3.4% 191 16 Denver-Aurora-Broomfield, CO 2.1% 119 41 Richmond, VA 1.1% 59 * Leading metro markets are those posting 1.8% job growth 17 San Diego-Carlsbad-San Marcos, CA 1.8% 99 42 Louisville-Jefferson County, KY-IN 2.1% 118 or above. Lagging and declining 18 Riverside-San Bernardino-Ontario, CA 3.0% 168 43 Memphis, TN-MS-AR 1.2% 69 are metro markets posting 19 Baltimore-Towson, MD 0.9% 50 44 Oklahoma City, OK 0.3% 19 below 1.1% job growth. 20 St. Louis, MO-IL 1.2% 64 45 Raleigh-Cary, NC 2.8% 153 Average is all other metro 21 Tampa-St. Petersburg-Clearwater, FL 3.0% 166 46 Providence-Fall River-Warwick, RI-MA NECTA 0.6% 33 markets posting job growth 22 Orlando-Kissimmee-Sanford, FL 3.9% 215 47 New Orleans-Metairie-Kenner, LA 0.2% 10 between 1.1% and 1.8%. 23 Pittsburgh, PA 1.0% 53 48 Hartford-West Hartford-East Hartford, CT NECTA 0.7% 40 24 Charlotte-Concord-Gastonia, NC-SC 2.9% 163 49 Buffalo-Niagara Falls, NY 0.7% 40 25 Portland-Vancouver-Hillsboro, OR-WA 2.0% 114 50 Rochester, NY -0.4% -22 Source: U.S. Department of Labor, Kantar Retail Kantar Retail © 2017 8 Understanding the Larger Competitive Context Where Ahold USA Supermarkets Shoppers Spend the Most on Food/groceries in All Regions Year Ago Year ending Jul-17 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Ahold (Total) ShopRite Walmart (Total) Other BJ's Wholesale ALDI Costco Trader Joe's Whole Foods Wegmans Supermarkets excl NM Conventional Club Market Supermarkets Source: Kantar Retail ShopperScape®, August 2016-July 2017 Kantar Retail © 2017 9 Walmart US Strategy Focus on baskets in store and online to drive productivity Bolstering roots in the productivity loop: “We’ve got to win on baskets, and the economics are not only in our favor, but ‒ Investing in price to drive low-price perception in the customers’ behavior if they shop ‒ Continued demands for EDLC a basket at a time” – Doug McMillon, ‒ Demands for cost efficiencies via strategic sourcing, retail-ready packaging, and Walmart Inc. CEO, October 2016 inventory management, including On Time In Full and shelf-pack requirements Driving growth through comps and online: ‒ Adding just 35 Supercenters and 20 Neighborhood Markets in 2017 crystallizes the need WMT Sources of Growth to drive growth through existing stores. ‒ Acquisition of Jet and its online basket-building capabilities (Smart Cart technology) intends to bring efficiencies of Supercenter online and adds a “new loop” to the productivity loop, elevating the role of baskets online as well as in store. ‒ Other online retailer acquisitions (Shoes.com, Moosejaw, Modcloth) bring category and online selling capabilities to the evolving eCommerce business. Executing strategy aligned with the fundamentals: ‒ Running Great Stores: Efficiencies, elevated role for associates, remodels (500 stores in 2017) ‒ Delivering Value: Price investments, highlighting price leadership, demands for lower costs across the store ‒ Being Great Merchants: Fresh, house of brands/innovation, private label, plus goals around inventory and cost control ‒ Providing Convenience: Neighborhood Market, Walmart.com, online grocery Source: Kantar Retail, company reports Kantar Retail © 2017 10 BJ’s Wholesale Growth Strategies and Major Initiatives Growing New Opportunities Advancing Online Strengthening
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