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Supermarkets Need to Get Sexier in Amazon Era, Grocery CEO Says

By Daniela Blot

The key to surviving Amazon.com Inc.’s grocery push? Making sure traditional supermarkets are still exciting places to visit.

That’s the message from Dick Boer, chief executive officer of Royal Ahold Delhaize NV, the grocery giant that owns Stop & Shop, Hannaford and Food Lion.

Boer estimates that as much as 15 percent of grocery purchases will move online by 2025, but that means most customers will still visit stores — especially for fresh items like meat and produce. To make Ahold’s stores more enticing, they may add restaurants and other gathering spots, he said in an interview on Friday.

“We have to make the store more exciting,” Boer said. “The shopping environment needs to be easier, less complex and more entertaining.”

Ahold has more than 2,000 brick-and-mortar stores along the East Coast, but it’s also confronting Amazon online. The company’s grocery-delivery service Peapod has operated for about 25 years (in the early days, customers ordered their food via fax).

The cost of delivering groceries to shoppers’ homes remains a hurdle, and Peapod isn’t yet profitable, Boer said. But the chain sees the service as a necessity for grocers at a time when more customers are shifting online.

Amazon’s $13.7 billion acquisition of Whole Foods has roiled the grocery industry and reverberated through the food world, fueling pessimism about both traditional supermarkets and upstarts such as meal-kit delivery business Blue Apron.

Earlier this week, Albertsons Co., the second-largest U.S. grocery chain, agreed to buy the meal-kit provider Plated. The grocer paid about $200 million for the startup, said a person familiar with the deal, which was completed swiftly in reaction to the Whole Foods acquisition.

Ahold offers its own meal kits through Peapod, and Boer thinks companies in that industry will struggle to survive unless they partner with grocery stores. The boxes of ingredients for meals are a nice additional purchase for a customer doing their grocery shopping online, but they don’t work as stand-alone products. It’s too expensive to acquire and keep customers if your only business is delivery meal kits, he said.

“Meal boxes really need the support of a home-delivery system,” he said. “The best way is to have the support of dry groceries.”

Reprinted from http://gearsofbiz.com/supermarkets-need-to-get-sexier-in-amazon-era-grocery-ceo-says/78411

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