ZAANDAM, The Netherlands -- Ahold here said last week it plans to combine support functions for two of its U.S. operating units -- Tops Markets, Williamsville, N.Y., and Giant Foods, Carlisle, Pa. -- to improve the competitive position of each chain in its respective market.
The move is expected to eliminate approximately 225 positions at Tops headquarters over the next few months, the company said.
Although both Tops and Giant will continue to operate as individual entities under their own banners, the sharing of support functions will enable the two chains "to think like a company with the combined strength of 233 supermarkets while developing a structure that will ensure a solid local focus on sales and marketing, operations and execution at store level," Frank Curci, Tops president, said.
Shared functions will include information technology, real estate, private-label development, human resources, and advertising and promotion, the company said. Tops and Giant already have similar IT platforms, Ahold added.
According to Bill Grize, president and chief executive officer, Ahold USA, Chantilly, Va., "This initiative is fully in line with Ahold USA's strategy to capitalize on available expertise. It also provides greater operating efficiencies while maintaining a focus on local marketing.
"Successful companies need to continuously refine their organizations and business practices to stay on top, and this is exactly what Tops and Giant are doing."
Ahold said it is calling the partnership a shared services structure -- an approach similar to the sharing of synergies and best practices across Ahold companies globally, a spokesman for Ahold USA told SN, "except this is a more targeted approach because it capitalizes on the geographic proximity of the two chains to produce numerous benefits."
The spokesman, Barry Scher, vice president, public affairs and communications, told SN the shared services structure is unique "because it allows each company to continue to operate as a separate and distinct business while joining forces to support a number of functions that lend themselves to a shared experience to increase efficiency and generate substantial cost savings.
"What this approach does is enable Ahold to maximize the contributions that both Tops and Giant bring to the table so they can both further their growth," Scher explained. "Because the two companies are contiguous, of similar size and so much alike, they are being given this opportunity that other Ahold divisions may not have."
According to Curci, the decision to eliminate administrative positions at Tops "in no way reflects on the talent and education of the Tops team. However, to remain a strong leader in the future and to continue to grow further, we must begin to think differently about how we do business today.
"Because specific areas need to be assessed and opportunities to share services are yet to be finalized, specific positions [for elimination] have not yet been identified."
The combination of support functions will be phased in over a nine-month period, beginning in early January and concluding next September, Scher told SN.
He also said the jobs will be eliminated at Tops rather than at Giant "because Giant has already gone through a similar process earlier this year when it combined functions with Edwards."
Ahold has subsequently decided to eliminate its Edwards Super Food Stores division by moving 64 Edwards units into its Stop & Shop division, based in Quincy, Mass.; four other Edwards in New Jersey will become part of Ahold's Super G division, based in Landover, Md.