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Summary
The main question in this literature assignment is: ‘What are the strengths and weaknesses of the success formula applied by Albert Heijn?’ To answer the first part of this question, the three main strengths of Albert Heijn are pointed out: marketing, replenishment and logistics. Marketing is divided in two parts: image and advertisement. The image of Albert Heijn is very important for attracting customers and consists of four topics: high quality, large range of products, shopping experience and extensive service. These are the main reasons for customers to choose Albert Heijn. The second part of the strong marketing of Albert Heijn is the advertisement, illustrated by an example about the premium campaigns of the Wuppies, Welpies and Beesies. The secret of those campaigns is extensively analysed with innovation model of the Delft Systems Approach.
Next strength is the replenishment; Albert Heijn started to use central replenishment in 2008 as customers became more unpredictable and demanding. The new replenishment system consists of a single point of customer demand forecasting and centralized control management. In terms of the main process criteria of the Delft Systems Approach, flexibility and control are largely improved. Finally, ten reasons are named for the success of Albert Heijn from a logistics point of view. Four reasons are really process improvement and therefore analysed with the Delft Systems Approach. Ordered Today Delivered Tomorrow, electronic communications, order picking and again order centrally together improve all the main process criteria, some criteria are even improved more than once.
In order to answer the second part of the question, the formula of the main competitor Jumbo is analysed to determine the weaknesses Albert Heijn faces. The Jumbo formula consists of three unique selling points: low price, large range of products and high service. The price is a minor weakness for Albert Heijn, because Albert Heijn has a larger profit margin on its products and is too strong to lose a price war. The larger range of products might be a reason for customers to choose Jumbo instead of Albert Heijn, however not all customers are aware of this difference. The major weakness for Albert Heijn is the high service Jumbo delivers to its customers, better known as the Seven Certainties (Zeven Zekerheden). This weakness can be very critical for Albert Heijn, as it is based on annoyances of Albert Heijn customers.
Conclusion is that the main strengths of Albert Heijn are marketing, replenishment and logistics. The Albert Heijn marketing is unique and attracts many customers, both by image creating and advertising. The central replenishment makes the process more flexible and controllable and the logistics are maybe the most important strength for Albert Heijn, saving 2-3% on its total costs. The major weakness compared to Jumbo is the customer-focus, as annoyed Albert Heijn customers may change to Jumbo for this reason. Recommendation for Albert Heijn would be to better listen to irritations of customers and adapt the service with this complaints and comments.
