Ahold Delhaize Turns to Private-Label Discounts, Prepared Meals to Combat Inflation

As restaurants and grocers alike notice consumers trading down to lower-priced options, multinational grocery giant Ahold Delhaize — parent company of a range of popular brands including Albert Heijn, Giant, Stop & Shop and more — is stocking up on lower-priced products for cost-concerned shoppers.

Frans Muller, the company’s president and CEO, spoke to these efforts in a statement accompanying the release of the grocer’s second quarter financial results Wednesday (Aug. 10).

“Consumers’ household budgets are under pressure and household purchasing power is declining. Our brands are laser-focused on … helping them to manage their spending efficiently,” Muller said. “[They are] expanding their high-quality own-brand assortments, introducing more entry-priced product solutions, and ensuring our highly tailored omnichannel loyalty programs offer competitive and attractive solutions across all customer touchpoints.”

On a call with analysts Wednesday, Muller cited the example of the company’s Belgium-based brand Delhaize launching its “Little Lions” campaign, whereby the company advertises price reductions on 500 private-label products.

Meanwhile, North Carolina-based grocery chain Food Lion introduced a $12 “rotating daily meal deal” promising to feed a family of four. Additionally, as consumers seek cost-effective alternatives to restaurant takeout and delivery, Maine-based subsidiary Hannaford has been promoting its “assortment of affordable ready meals.”

“Our efforts in this respect are clearly paying off. Customers vote with their feet, their clicks and their wallets,” Muller said, noting that sales growth has exceeded expectations.

Indeed, these initiatives can go a long way, given consumers’ mounting anxiety about food costs. Research from PYMNTS’ recent “Consumer Inflation Sentiment” study, which draws from a July survey of nearly 3,800 U.S. adults, found that only 37% of consumers agree with the sentiment “I have no worries about how to afford food or basic needs for me and my family,” leaving nearly two-thirds with at least some anxiety about feeding themselves and their family.

Get the report: Consumer Inflation Sentiment: July 2022 — Consumers Pull Back and Prepare for the Long Haul

Additionally, if the United States population is any indication, consumers are experiencing food inflation even more acutely than the government-measured price increases would suggest.

The Consumer Price Index for All Urban Consumers (CPI-U), reported by the U.S. Bureau of Labor Statistics (BLS) Wednesday, revealed that in July, food at home (i.e., grocery) prices rose 13.1% year over year, while food away from home (i.e., restaurant) prices rose 7.6%.

See also: Why Retailers Should Worry About Inflation but Dread the Wealth Effect

Yet, consumers report even greater increases in how much they are spending on food. Data from a national online study of 3,783 consumers conducted by PYMNTS last month revealed that consumers report paying 20% to 30% more for retail and grocery purchases and to eat at restaurants.