Frans Muller (Ahold Delhaize): ‘We Aim to Grow Faster Than the Market’

The conversation is strictly Ahold Delhaize, then. Over a decade ago, Frans Muller became CEO of the Belgian supermarket chain Delhaize. Under his leadership, the company merged with the Dutch Ahold, both internationally operating companies. ‘I look back on it with pride,’ he says. After the merger and the departure of CEO Dick Boer, Muller took the helm of the Netherlands' largest international (supermarket) company in Zaandam. This spring, he presented an update of the strategy for the coming years. The plans are ambitious. Muller wants Ahold Delhaize to ‘grow faster than the market,’ focus on more private label products, increase healthy products on the shelves, and pursue extensive digitalization. Charles Honée, a partner at law firm A&O Shearman, delves into this vision with Muller.

You presented your strategy update this spring. What is the core of this new strategy?
‘We first and foremost want to be a very solid company for our stakeholders, which includes our customers, colleagues, shareholders, suppliers, and the society in which we operate. The core lies in the dimension of growth. That will be important: we want to grow faster than the market. We want to gain market share. This is an interesting and ambitious combination which we will be working on in the coming years. We are making some clear choices, such as allowing for a bit more flexibility in our margin to really achieve the growth ambition.’

How has the announcement been received by stakeholders?
‘My sense is that they are enthusiastic about the content because it is comprehensive. However, I also notice some cautiousness. It is like they are saying, 'Show us that you can execute it.' That is not an illogical attitude. But I am not unduly concerned. We as team were hired for this very execution. So that's what we will do. Together. We developed the strategy with our top-100 executives; they were all involved. The advantage is that we now have more engagement, we are all on the same page, and can maintain momentum. Everyone knows what needs to be done."

I noticed that the strategy update frequently mentioned 'trust.' It is a concept that often surfaces in your statements: trust and connection with the local community. Why is that so important to you?
‘Because our brands are at the heart of society. We have 7,700 stores. That's 7,700 neighborhoods or communities. They are all different, in terms of income, ethnicity, everything. During the COVID-19 pandemic and the period of hyperinflation, we realized anew how extremely important customer trust is. We did a very good job during COVID, keeping the shelves stocked and keeping our customers and colleagues safe. The trust in us has grown.
We also want to take responsibility. As a company or a store, we want to be a steady anchor to communities—a place where you enjoy shopping for your daily needs. But also, a company that helps others, for example, through donations to food banks. People shop at stores where they feel good. That goes beyond product and price. Customers also ask themselves: is this company doing the right things, for us, for the world? We want to demonstrate this every day. It is the reason why trust and connection are of the utmost importance. Not just for the customer, but also for the employees. We also want to do the right things for them. We as management need to function in this way too: reliable and consistent, constantly checking that we talk to people to keep an ear to the ground.’

You still choose to operate a relatively large number of different brands under the parent company's banner. Why is that?
‘We very consciously chose to continue working with 16 brands. Some retailers have one brand on display. We have different brands because we strongly believe that retail is locally anchored. This connection of supermarkets with the community sometimes spans generations. People have been going to Delhaize for over 155 years, to Albert Heijn for over 135 years, or Hannaford for 140 years—this is to be treasured. We want to, also into the future, keep it as differentiated and local as possible at the front end. At the back end, we naturally aim for scale and synergy, which reduces costs and enables us to keep selling prices competitive. The back end is where we need to collaborate on supply chain, procurement, technology, and administration.’ 

You operate in different markets in different countries. How do you implement a unified strategy for markets that differ significantly from each other?
‘The group strategy is universal, but you must take into account the different life cycles in markets. Sometimes you need to run faster on one side of the ocean, sometimes on the other. When I look at digital and artificial intelligence (AI), the Americans have a very strong position, and in some parts of Europe, there is still work to be done. While, at the same time, the European legislation is the foundation for our entire company in this respect. It is different with introducing private labels. We aim to have 45% private labels. Here in the Benelux, that's no problem. At Albert Heijn, for example, we already have well above that. But in the United States, it is still much lower: just above 30%. Customers there have different preferences from customers here.
From the perspective of our strategy, all countries will need to weigh in to collectively reach that '45.' This applies to all our growth and sustainability goals. We will translate all those goals into our brands and will then, per brand, identify what steps are needed to keep up with the movement. This requires some balancing, but that is what makes a portfolio of different brands interesting. You can have a solid group strategy with different implementation timelines. Important thing is everyone is moving toward the same finish line.’

A significant ambition in your strategy is further digitalization. Are you on track?
‘We have always been a company that invested heavily in technology. We believe in omnichannel companies, combining physical stores with online shopping. Over the last more or less five years we have solidly anchored the different customer journeys. We are there with Albert Heijn to go for a cup of coffee, also at the station; we are there at the weekend for the full shopping cart in the supermarket, and during the week we deliver to the customer's door. You want to serve all these different moments with one brand, with the same pricing and the same bonus card. And you also want to offer personalized deals.
To do that, we need to know the customer well. That per definition means managing information and data securely, something we established over many years. We handle our data carefully and have a good track record in the industry. We learned enormously much about digitalization over the past few years. We are constantly improving on digitalization, as I see many still untapped opportunities here. Not only on the customer side but also on the backend, under the hood. In Zwolle, we now have a fully mechanized warehouse that can handle 55,000 additional orders per week. We are also fully engaged with AI. With ING, KLM, and NS (the Dutch Railways), we are one of the leaders of the Kickstart AI initiative, which as an example has as an initiative with the aim of reducing food waste. We now have electronic shelf labels that are smart enough to automatically discount products. Customers benefit from this, society benefits because it reduces food waste, and we benefit too.’

You mention the fight against food waste, and you previously talked about 'doing good things for the world.' Sustainability goals and ESG policy are important. How do you promote that?
‘We want to act; we want to be a catalyst. 'Doing' at Ahold Delhaize is based on very concrete and ambitious goals. We are transparent about our progress. We want to take responsibility to make our food chain more sustainable, to act on energy, climate, packaging, and food waste. We can and want to play a pioneering role here.
But we cannot achieve this on our own. We are in the end a relatively small player in the big picture. We look for collaboration with other retailers and manufacturers to find connections where we can act together. I do this personally, for example, through the Consumer Goods Forum, where I am the co-chair. Our discussions are mainly on matters which would benefit from a joint approach, plastic waste, as an example. In collaboration, we can achieve more.

You've been in the retail industry for a long time. Have you seen many changes over the past decades?
‘Yes, the changes have been vast. The sustainability agenda, for example, is more pronounced than ever. Sustainability used to be a nice to have for businesses, but now it has thankfully become a core part of the business agenda. The human aspect has also become much stronger. Teams are more diverse, making them more effective and more enjoyable to work with. I have also noticed an improvement in how we listen to new, young talents.
What has really changed is the technical side of retail, particularly in data. I have noticed too that international expansion seems to be slowing down. Companies that used to spread their wings towards new markets are now focusing more locally. Asian retailers have become incredibly good; they have developed their own markets and no longer need advice on how to succeed—they do it fantastically well for themselves. China has skipped a market phase; they have established modern stores equipped with the latest technology. Looking back over the past decades, one could also say that the market has become more competitive, making it harder to truly succeed. But I hesitate to say this because it might sound like an old man's tale.’ Laughing: ‘When I say this, I almost hear my father speaking.’

Reflecting on your years at Ahold Delhaize, there's a clear trajectory: from merger, to integration, to growth. Let us go back to the starting point: the merger. How do you view that period?
‘I am especially proud of how well it went. When Dick Boer (then CEO of Ahold) and I started, we received warning from all corners: Dutch and Belgians together, that would never work, right? They were supposedly two completely different worlds. But we, along with our board of directors, found a good way to make it work. Dick and I were determined to make it a success. We did not want to go down in history for the wrong reasons. So, we focused on integration, bringing people together, and achieving synergy, while ensuring that the underlying business continued to run smoothly. Yes, I look back on that with pride. I think we did a good job together.’

Would you consider another big merger?
‘If the opportunity arises, why not? We would certainly consider it. We have the financial foundation to do it; we have a strong balance sheet. But a big merger or acquisition must align with our strategy and provide value to our stakeholders. It has to make sense.’

I understand that you would want to expand in the United States particularly?
‘We want to strengthen our position in the southern U.S.A., where there is population growth and economic growth—an attractive combination for retail. There are also several states where we have a lighter presence, and I see opportunities there. But as I said, it must be done in a way that fits our strategy. And you cannot always choose the timing; things come your way, and then you have to see what you can do with them.’

Increasing market share in the coming years—is that the crux?
‘Yes, that definitely is the idea. It will be challenging for many companies to stay competitive as customer expectations continue to evolve, while maintaining a healthy bottom line. Scale plays a huge role. In the past, scale in retail was mainly about purchasing power. This remains important. But recently, technological power has become much more significant in terms of scale. The same goes for sustainability. There are more factors than just traditional purchasing power. We need to stay sharp on these.’ 

How would you describe yourself as a leader? And in what kind of work environment do you thrive?
‘I think people around me would describe me as energetic. I also appreciate a no-nonsense approach. I like a company where people get things done, where there is a good culture with little politics. And I love people. If you do not love people in retail, it is not going to work out well. At least, not for the leader. I find it important to understand the company well, and I am driven by growth. I enjoy international diversity; I have always worked and lived in very international settings, which I find pleasant. I also enjoy working at an international company where you can have a local impact. The Albert Heijn store in Rotterdam-Charlois is a very different store than the Giant Food store in Baltimore, and that is what makes this environment interesting.’

What do you want your legacy to be when you eventually look back on your career?
‘I am not much of a legacy person. That is not how I see life. Questions like 'what will you leave behind?' or 'what will be on your tombstone?' are not things I think about. What I want to do for myself—and this has nothing to do with legacy—is to make a serious contribution to the well-being of people, to a good future with healthy, affordable food, combined with good access to education. I firmly believe that having good work is crucial. Work is the key to self-respect and a better future. Here at this company, I can contribute to that.
I often ask myself: is this fulfilling? And yes, it is. This work still excites me. But I prefer to think about tomorrow rather than yesterday. Just doing your best and contributing to the sustainability of this planet. That might sound a bit Calvinistic, but that is what I believe in.’

This article was published in Management Scope 07 2024.