NE-165 Case Study: The Fresh Company

"Koninklijke Ahold nv" (Royal Dutch Ahold) was the leading food retailer in The Netherlands in 1990 with an approximately 36% share of the food and grocery market. Moreover, its four U. S. companies (Giant Food Stores, PA.; Bi-Lo, NC.; Finast, OR.; and Tops Friendly Markets, NY) ranked it number ten among the largest U. S. food retailers . Despite this dominance and obvious knowledge of food wholesale and retail distribution, Ahold had historically been unable to capture a satisfactory share of the fresh food business in The Netherlands. Yet this business represented approximately $7 billion in current business and, perhaps more importantly, was thought by many to hold the key to future success in the food industry. The case study documents the set of circumstances that led Ahold to experiment with a new food store format that, its management hoped, would allow a more effective penetration of the fresh food business. A project director is appointed with the assignment to build a new fresh foods business. The case describes his initial actions and presents the rather disappointing results after the store had been opened nine months. Part '~A" of the case ends with an outline of the areas that the project director feels merit strategic redirection in order to achieve more acceptable performance. Part "B" of the case summarizes the actions incorporated into a new strategic marketing plan in hopes to salvage the project. New financial results, nine months after the repositioning, are presented.