By Jessica DiNapoli
NEW YORK (Reuters) -Ahold Delhaize has hit "roughly half" its goal to grow revenue from businesses beyond grocery stores to 1 billion euros by 2025, CEO Frans Muller told Reuters, an effort focused on selling ads on its supermarkets' websites and monetising insights on consumer data.
Grocers like Ahold Delhaize are building ventures that sell online advertising to consumer goods companies, including the ability for their brands to appear first in shoppers' searches or feature as "sponsored products" - offerings pioneered by Amazon (NASDAQ:AMZN).
They are also working to improve the quality of the data insights they can sell to the consumer goods companies, who in turn use it to target shoppers with ads for their products. The data is encrypted and aggregated so that it cannot be traced to individual shoppers.
Muller said Ahold Delhaize, which owns supermarket chains including Stop & Shop in the United States and Albert Heijin in the Netherlands, uses revenue from advertising to keep food prices lower as inflation persists in Europe and the U.S..
"What we generate on retail media revenue, we will reinvest in our business to make sure that consumers can afford themselves healthy and sustainable products," Muller said.
"We have to work very hard together, with retail and manufacturing, to keep costs down," he added.
Muller declined to share how much Ahold Delhaize earns each time a shopper clicks on a sponsored product or banner ad.
Ahold Delhaize, which has a U.S. retail media business called Peapod Digital Labs, is working on plans to launch an agency for Europe that will focus on brands not already carried by the group's grocery stores.
Retailers are scrambling to catch up with Amazon and Walmart (NYSE:WMT), said Sean Turner, chief technology officer of Swiftly, a retail technology solutions provider.
Amazon posted $11.6 billion in revenue from its ad business in the fourth quarter, while Walmart has expanded its Walmart Connect in-house advertising business since 2019, when it cut ties with an external advertising partner.
"Retailers have to compete in retail media to have a future," Turner said. "Others have figured out they don’t have to make money selling stuff.
"They can sell at loss," and re-coup margins later through selling ads, he added.