1. 1 Wal-Mart vs Ahold Mirjana Uzelac Neda Kovacevic Mónica Pérez Corporate Intelligence United Business InstituteDecember 2003

2. 2 History Ahold 1887 Albert Heijn takes over his father’s small Zaandam grocery store 1911 First Albert Heijn brand name products sold 1948 Ahold on Amsterdam stock exchange 1973 Founding Ahold N.V. for international growth 1977 In U.S. for the first time 1987 Queen Beatrix awards Ahold “ROYAL” 1990 Goes to Czechoslovakia 1992 Portugal 1995 New distribution system: store delivery in 18h 1996 Singapore, Thailand, China, Spain, Poland 2000 Acquired U.S. Foodservice 2003 Big financial scandal Wal-Mart 1962 Company founded with opening of first Wal-Mart store in Rogers, Ark. 1972 Listed on New York Stock Exchange 1979 Wal-Mart reaches $1 billion in sales 1983 First SAM'S CLUB opened 1987 Wal-Mart Satellite Network completed 1988 First Supercenter opened 1990 Wal-Mart becomes nation's No. 1 retailer 1991 International market entered: Mexico 1995 Argentina and Brazil 1996 China in a joint-venture 1997 Wal-Mart No. 1 employer in the U. S. 1998 Germany, Korea in a joint venture 1999 Largest private employer in the world 1999 United Kingdom

3. 3 Getting Ahold of Things The fraud was simplicity itself. Food manufacturers frequently pay a fee to supermarket operators to encourage them to buy in bulk and then to promote the products to the ultimate consumers. These promotional allowances typically are a function of the volume purchased. The company then aggressively accounted for these promotional allowances, but did not have the volume to justify their recognition. Prematurely and incorrectly recognizing these promotional allowances of course increased their profits for some 500 million euros.

4. 4 Competitive Fact Sheet Wal-MartAhold Mission/ Vision To give ordinary folk the chance to buy the same thing as rich people. Serve the needs of our customers by integrating a close-knit family of world-class food retail and foodservice operations that make the whole of our company worth more than the sum of its parts Strategy 1. Respect for the individual 2. High standards of service 3. Constant strive for excellence Low prices, In-stock positions, Customer service 1. Re-engineer food retail 2. Recover U.S. Foodservice 3. Reinforce accountability, controls and corporate governance 4. Restoring Ahold’s financial help Activities 1. Food retail 2. Non-Food retail 3. On-line food retailer 1. Food retail 2. Food distribution (U.S. Food service) 3. Liquor, beauty care stores 4. On-line food retailer

5. 5 Wal-Mart vs Ahold Wal-MartAhold 2002 Sales (mil)$244,524$59,267 1-Year Sales Growth12%-1% Grocery Sales (%) 3484 Domestic Sales (%) 8415 Foreign Sales (%) 1685 2002 Employees1,383,000270,739 1-Year Employee Growth1.2%(15.5%)

6. 6 Wal-Mart presence in Europe

7. 7 Wal-Mart Subsidiaries in EU UK 250 stores Asda, Wal-Mart Germany 95 stores Wal-Mart

8. 8 Ahold Presence in Europe

9. 9 Ahold Subsidiaries in EU Netherlands 2,333 stores Albert Heijn, Etos, De Tuinen, Jasmin, Gall&Gall, C1000, Ter Huurne Norway 1,104 stores Rimi, ICA, Maxi Denmark 12 stores ISO Sweden 1,846 stores Rimi, ICA, Maxi Estonia 3 stores Rimi Latvia 26 stores Rimi, Maxi Lithuania 38 stores Rimi, Eko Poland 165 stores Albert, Mega, Hypernova Czech Republic 203 stores Albert, Hypernova Slovakia 2 stores Hypernova Spain 623 stores Supersol, HiperDino, Netto, HiperSol, Cash Diplc Portugal 198 stores Pingo Doce, Feira Nova

10. 10 Sector Trends for next 5 years Diversification Globalization Strong Retailers Technology

11. 11 Sector Trend: Diversification The maturity of the food market has led supermarkets to look for new opportunities: non-food 1 discount format 1 e-commerce 2 expansion abroad 2

12. 12 But almost all have ignored the rise of wholesale food and drink trade However, it is the most interesing retail sector : percentage of consumption of food and drink in places other than homes has risen compared to the total consumption: demographic change: increase in the proportion of older, wealthier people in the population higher wholesale margins Wholesale demand from the food service segment increases by 4% to 5% a year across Europe, compared with growth in retail demand of 1% to 2%. 1995200020052025 32%35%38%50% Sector Trend: Diversification 2

13. 13 Wal-MartAhold 1. Non-food Tire & Lube Express, Wal- Mart Optical, Wal-Mart Pharmacy, Wal-Mart Vacations, Wal-Mart's Used Fixture Auctions Ethos, Gall & Gall 2. Discount format Wal-Mart Stores, Bodega, Todo Día RIMI, Netto, Balaio 3. E-commerce WalMart.comPeopod, ICA 4. Wholesale Sam’s ClubDeli XL, Shuitema 5. Expansion abroad 12 international locations27 international locations Sector Trend: Diversification

14. 14 Sector Trend: globalization 3 The consolidation and internationalisation of the food retail can be expected to continue. 4 or 5 large retail organizations will operate on a worldwide scale, a number of dominant regional and national retailers will exist, the traditional small supermarket is approaching the end of its lifecycle. Market Share of top 5 Retailers in the EU (Carrefour, Metro, Tesco, Rewe, Intermarché) Source: Lebensmittel-Zeitung 2002

15. 15 IGD Global Retail Index 1 Rank GRI Rank by Turnover CompanyGlobal Status 12CarrefourLeading Global Retailers 23Ahold 31Wal-Mart 45MetroLeading International Retailers (nearly global) 57Tesco 68Ito Yokado (inc. 7 Eleven) 720Casino 817Auchan 921Delhaize 1013Aldi 110Costco 121218Tengelmann (inc. A&P) Source: IGD Research - Date published 04/02/03

16. 16 Competitive Positioning 1 The IGD 'European Retail Index' gives a more accurate ranking of the region's top 30 retailers than those rankings traditionally based on turnover size alone.

17. 17 Future Market Focus 1 Countries Wal-MartAhold China Italy Russia Japan Hungary India United States Poland Canada France United Kingdom Germany

18. 18 Sector Trend: Strong Retailers The power of the retail sector will grow: retailers are expected to rule the food chain in the coming five years. 3 Retailers are trying to present themselves as a strong brand, but only a few will succeed. 3

19. 19 2003 Global Most Admired RankCompany 1Wal-Mart Stores 2General Electric 3Microsoft 4Dell Computer 5Johnson & Johnson 6Berkshire Hathaway 7Procter & Gamble 8IBM 9Coca-Cola 10FedEx Source: Fortune

20. 20 Wal-Mart Subsidiaries Europe Wal-Mart Germany Wal-Mart UK ASDA Asia Wal-Mart Korea Wal-Mart China SAM’S Club The Seiyu Americas Wal-Mart Argentina Wal-Mart Brazil Wal-Mart Canada Wal-Mart de Mexico Wal-Mart Puerto Rico SAM’S Club Supermercados Amigo Todo Dia Bodega

21. 21 Ahold Subsidiaries Europe Ahold Polska Ahold Czech Republic Ahold Slovakia Ahold Supermercados Albert Heijn Schuitema Etos Gall & Gall Deli XL ICA AB Jerónimo Martins Asia Tops Tops Market Place Americas Stop & Shop Giant-Landover Giant-Carlisle Tops BI-LO Bruno’s U.S. Foodservice Peapod La Fragua CSU CARHCO Bompreço G. Barbosa Disco

22. 22 Sector Trend: Technology Cooperation will become increasingly important 1 : between manufacturers and retailers to improve the quality, velocity and dynamics within the chain, between stores to share best practices. Technology strength will be a critical success factor for retailers and manufacturers 3

23. 23 Technology Based Intelligence Wal-Mart Wal-Mart Satellite Network (largest private satellite communication system in the U.S.) radio-frequency- identification (RFID) tags—chips Ahold Sales Information System RS/6000 ® SP™ servers

24. 24 Wal-Mart: SWOT Analysis Strengths Scale Home market strong position Technological pionneers Focus on discount Weaknesses International presence and profits Low penetration in EU Lack of international experience Opportunities Growing supercenter format Product diversification (food) New markets (EU, Asia) E-commerce Threats Too large too manage Internationalisation costs Union opposition Not present in large communities

25. 25 Ahold: SWOT Analysis Strengths International experience Non-food, discount format, wholsale, e-commerce Strong domestic presence Ability to integrate acquisitions Weaknesses No global brand Not in EU key markets (FR, GB, D) Loss of investors confidance Scale vs Wal-Mart Opportunities Diversification of format Diversification of products Acquisition of major EU retailers Presence increase in Asia Threats Risk of joint-venture failure Strengthening Euro, weakening dollar Too complicated to manage Wal-Mart position in the US

26. 26

27. 27 Sources 1) IGD Research, www.igd.com 2) The McKinsey Quarterly 3) Cap Gemini Ernst & Young, “The Changing Face of the Worldwide Food Industry” 4) Tansaş, “Presentation of Food Retail Sector”, www.tansas.com 5) www.hoovers.com