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Operational risks
Ahold
Annual Report 2011
Group at a glance Performance Financials Investors
How we manage risk continued
Risks related to macro economic circumstances
The global economic downturn that started in late 2007 has impacted all of the economies and
markets in which we operate, and a recovery is slow to materialize. High unemployment, reduced
consumer confidence and disposable incomes, and food and fuel price volatility can negatively
affect customer demand. The financial crisis has restricted the availability of credit in our markets
and limits governments' abilities to implement further fiscal stimuli. This may result in sustained
sluggish growth in customer demand as shoppers remain price sensitive, cause the failure of key
suppliers, or otherwise disrupt our supply chains, impacting the cost and availability of goods.
Inflationary forces impacting cost of goods sold might be difficult to pass on to consumers.
As a result of the current economic climate, our competitors continue to take aggressive actions.
These factors or other unforeseen effects of the current economic climate could impair the
effectiveness of Ahold's strategy, reduce the anticipated benefits of its price repositioning and
cost savings programs or other strategic initiatives, and may have a material adverse effect on
the Company's financial position, results of operations, and liquidity.
Risks related to acquisition and integration
As part of our strategy, Ahold is pursuing growth in existing and new geographic markets and is
looking to expand in e-commerce and other services. A lack of suitable acquisition targets at
acceptable prices may limit Ahold's growth. When acquiring other businesses, Ahold also faces
risks, for instance compliance and regulatory risks, related to the integration of these businesses.
In addition, Ahold is replacing its current IT infrastructure to make it fully scalable and replicable to
support Ahold's growth objectives. Anticipated IT synergies from newly acquired businesses will
only materialize after the current and planned IT systems and infrastructure projects have been
completed.
Our ability to open new stores is dependent on whether we are able to purchase properties or
enter into leases on commercially reasonable terms for properties that are suitable for our needs.
If Ahold fails to secure property in a timely manner, its growth may be impaired.
Risk related to large strategic projects
In order to achieve Ahold's strategic agenda and as a result of the way the Company is currently
organized, activities will increasingly be undertaken in the form of projects. If Ahold is not able to
execute and deliver major strategic projects on time and within budget, the realization of key
strategic objectives may be at risk, and unnecessary expenditure of financial and management
resources incurred. This could have a material adverse effect on Ahold's financial position, results
of operations, and liquidity.
Risk related to collective bargaining
A significant portion of the employees of Ahold's businesses are represented by unions under
collective bargaining agreements. As the collective bargaining agreements with those unions
expire, Ahold's businesses might not be able to negotiate extensions or replacements on
acceptable terms. Although we consider the relations between Ahold's businesses and the
relevant trade unions to be stable and our Ahold businesses have human resource functions
to support such union relations and collective bargaining negotiations, any failure to effectively
renegotiate these agreements could result in work stoppages or other organized labor actions.
Ahold's businesses may not be able to resolve any issues in a timely manner and contingency
plans may not be sufficient to avoid an impact on the business. A work stoppage due to the failure
of one or more of Ahold's businesses to renegotiate a collective bargaining agreement, or
otherwise, could have a material adverse effect on the Company's financial position, results
of operations, and liquidity.
