-
m.
Albert Heijn had an exceptionally good year. Sales (including sales to franchisees) rose by
4.5% to Dfl 6,902 million. Operating results rose considerably, too, which may be attri
buted chiefly to a rising demand for high-quality products and to a lesser extent to a
limited increase in costs. Albert Heijn's market share - including that of the franchise
organization - rose from 24.4% to 25.3%. The number of stores increased to 549,
consisting of 443 Albert Heijn stores and 106 franchised stores.
In 1989, 22 stores were opened and 13 were closed. In addition, 10 stores were trans
ferred to Albert Heijn Franchising and 16 stores were expanded or remodeled. The
sales area of Albert Heijn stores rose by 47,000 square feet to 4.2 million square feet.
Expectations are that a larger number of new stores will be opened in 1990.
In 1989, a start was made with repositioning certain private label product groups,
and with increasing the selection. This enables the product ranges to better match the
individual needs of consumers. Albert Heijn is thereby responding to ever more
differentiated purchasing behavior, a phenomenon that has been noticeable for some
years and that was more pronounced in 1989 than ever before. The consumer wishes to
choose from as wide a selection as possible. This is creating rising demand for products
with higher margins, which is positively affecting Albert Heijn's earnings.
The adjustments to the store organization made in 1988 yielded clear benefits in the
year under review, but continuous efforts need to be made to further reduce the wait at
checkouts. In 1990, major attention will be given to improving this situation.
In the field of store layouts several innovations were made, in part based on insights
gained in new prototype stores. In the coming years, these innovations will be
introduced into most of our stores. Further progress was achieved with store automation.
More than half of the stores now have on-site computer equipment performing various
functions. By 1989 year end, 129 stores were equipped with scanners in place of tradi
tional cash registers.
In 1989 several initiatives were launched to adjust the distribution structure to future
trends. One such trend is that sales per square foot in the stores will necessarily increase
as overall store sales grow, requiring more frequent store deliveries.
The meat packing plant in Eindhoven was converted into a fresh-food center. In
addition to processing and packaging meat products, this center now also handles daily
refrigerated deliveries of a broad assortment of fresh food. There are plans to convert
the three remaining meat plants into fresh-food centers, too, in the coming years.
Albert Heijn aims at being the best in its business. The capital investments to support
this goal will reach a record level in 1990. The decentralization of management will con
tinue within a central framework to ensure that Albert Heijn maintains a unified formula.
A milestone was reached in 1989 with the opening of the 100th Albert Heijn
franchise store. For the full year, the total number of franchised stores grew from 88 to
106. This helped boost Albert Heijn Franchising's consumer sales by 22.3%: average
sales per franchisee increased considerably as well. These results once again confirmed
our view that franchising is an excellent method to further expand the AH marketing
formula in The Netherlands. Consumer sales of the franchise organization are expected
to exceed Dfl 1 billion in 1990. The number of stores is also expected to grow, though at
a slower rate than in the past, as geographic opportunities are increasingly filled.
Growth will result mainly from the transfer of Albert Heijn stores to the franchise
organization.
By 1989 year end the Fresh Company was operating two stores. The formula is
undergoing further refinement in order to optimize the concept. In 1990 we expect a
modest expansion.
In 1990, Albert Heijn expects its sales to increase again. Operating results will also
increase, though more slowly than in 1989.
Sales of Ahold Specialty Stores rose from Dfl 377 million in 1988 to Dfl 635 million in
1989. Much of this rise reflects the acquisition in early 1989 of the Gall Gall and Party
Shop liquor store chains, which were added to Ahold Specialty Stores in order to ensure
the continuity of Ahold's wine and spirits retailing activities. The integration with the
Alberto organization went according to plan. In the first half of the year all stores adop
ted the Gall Gall name. As a result, Ahold now has a chain of 267 liquor stores, exclud
ing 6 franchised stores. The sales area of Gall Gall's own stores totaled 211,941 square
feet while sales increased to Dfl 351 million. Thanks to economies of scale, operating
results increased as anticipated.
19
Sales area
x 1,000 sq.ft.
10000
8000
6000
4000
2000
S5
86
87
88
Ahold United States
Ahold The Netherlands
