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    Ahold Head Outlines Growth Strategies in Speech to Shareholders

    AMSTERDAM -- At the 2006 Ahold Annual General Meeting yesterday, president and c.e.o. Anders Moberg struck an overall positive note in a speech to shareholders. However, despite Ahold's success in bouncing back from an accounting scandal that rocked the company in 2003, Moberg acknowledged that there had been "setbacks," and outlined such strategies as value repositioning, the introduction of private label products, and the rollout of a new general merchandise line to drive identical-store sales.

    AMSTERDAM -- At the 2006 Ahold Annual General Meeting yesterday, president and c.e.o. Anders Moberg struck an overall positive note in a speech to shareholders. However, despite Ahold's success in bouncing back from an accounting scandal that rocked the company in 2003, Moberg acknowledged that there had been "setbacks," and outlined such strategies as value repositioning, the introduction of private label products, and the rollout of a new general merchandise line to drive identical-store sales.

    "In the Stop & Shop/Giant-Landover Arena, as in all our retail businesses, we need to accelerate growth," noted Moberg, adding that Ahold was going to launch "a major value repositioning program" at the stores, a strategy that has already seen success at the company’s Albert Heijn and ICA divisions in Europe.

    "Value repositioning is about lowering prices and enhancing quality,” explained Moberg. "It is about listening to our customers -- and anticipating their needs." Competitive pricing has also worked well at Ahold’s Giant-Carlisle operation, he said.

    Moberg noted that private label products have "been a key tool in value repositioning at Albert Heijn and ICA, and will become more and more important across our businesses...With private label we can better differentiate ourselves and our brands. We can increase customer loyalty, and gain advantages on cost."

    Another important differentiator is general merchandise, added Moberg. "Our first step will be to roll out a new line of general merchandise and create a more integrated approach within our existing nonfood business," he said. "If this proves successful, we will further expand -- potentially doubling our nonfood sales by 2010."

    Ahold has also been testing innovative store formats and new products through "laboratory-type stores…on both sides of the Atlantic," added Moberg, citing the following new store features as examples:

    --Self-scanning technology to make shopping easier for customers and reduce store costs.

    --Healthy-living product lines such as "Nature's Promise" in the United States.

    --In-store nutritionists, and cooking classes on healthy eating.

    --The introduction of special nutritional labeling.

    To fund these initiatives, the company needs to reduce costs, conceded Moberg, noting that some of the ways Ahold was seeking to streamline operations were through sourcing and the introduction of a standard set of retail systems.

    "At the same time," he said, "we are using customer insight to work with suppliers on developing new products that customers want."

    Although the company has given an outlook for 2006 that falls short of the targets Ahold set back in 2003, Moberg emphasized that "these original targets remain unchanged. I believe we can -- and need -- to achieve them to continue to be competitive and successful. This remains our focus and our goal."

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