CARLISLE, Pa. — Tony Schiano said last week that he plans to retire as the head of Giant Food here, which has been one of the few truly bright spots in the recent history of Ahold's U.S. operations. He will be succeeded by Carl Schlicker, who is currently executive vice president, sales and marketing.
In an interview with SN following the announcement, Schiano reflected on the changes in the industry, the success of Giant Food and its EDLP format, and the day in 2003 that he pulled his car over to the side of the road to dial into a conference call where he learned of the accounting scandal that nearly destroyed Ahold.
A 34-year veteran of Ahold-owned chains, Schiano said he reacted with “shock and disbelief” at the news, told to him by then-head of U.S. operations Bill Grize, that sister company U.S. Foodservice had vastly overstated its profits.
“You could have knocked me over with a feather,” he said.
The intense forensic accounting that followed “was unbelievable,” Schiano said. “A lesser company would not have survived.”
Ahold did shed several of its assets in the wake of that scandal, including the Bruno's and Bi-Lo chains in the Southeast, and it recently put U.S. Foodservice on the block along with Tops, the Buffalo-based chain that Schiano also oversaw for the past three years as CEO of Giant.
He said he thinks a bit too much blame was placed on Cees van der Hoeven, the former Ahold CEO, and Michael Meurs, Ahold's former chief financial officer, who both resigned in the wake of the scandal.
“I'm sure they did some things in retrospect people will say were not the smartest thing to do, but I don't think that was what brought it down,” he said. “We have since learned there was some heavy-duty fraud going on.”
During his time in the network of chains that have been a part of Ahold — starting with Stop & Shop in 1973 — Schiano said he has witnessed enormous changes in both the competitive climate and the consumer's approach to food shopping.
“The industry has always been competitive within its own traditional ranks, but now it's been bombarded from all sides,” he said. “There's the supercenter phenomenon, club, dollar stores, hard discounters — everybody else is adding food to help drive frequency and trips.”
He said he sees the high-end players like Whole Foods and the low-end players like Aldi converging toward the middle, where traditional supermarkets still have an edge, given their wide range of offerings and their ability to leverage consumer insights.
“We have all the amenities already,” he said. “The only way these discounters or these organics players are going to be successful is if we allow them to be successful.
“At Giant, we have natural and organic sections that are quite extensive, we have fuel stations, we have prepared foods, and we have extended the variety and capability in all the fresh departments. We have differentiated ourselves, and given shoppers no reason to go anywhere else.”
He credited his staff and the relationship the banner has with its customers for the chain's success. He also said the success of the chain in part can be attributed to its stable management environment — he is just the fifth CEO in the chain's 84-year history.
Communicating value is one of the things Giant has always excelled at, he said. The chain has been an EDLP operator for 35 years, and successfully introduced its BonusCard program under Schiano's watch in 2000, an event he cited as one of the highlights of his 10-year career as CEO of the chain.
“We have a relationship of trust with our customers,” he said. “They see that we do have low prices, and they expect them, and we haven't really broken that bond. It takes a long time to gain a reputation like that, but once you've got it, you can really grow your business on it.”
He said the efforts to incorporate Tops under the Giant-Carlisle umbrella were impeded by the fact that the two banners operate under different pricing formats — Tops is a high-low operator, and Schiano said the differences are difficult to overcome. Tops was already under pressure from the difficulty it had incorporating an Ahold acquisition in the Cleveland area, and sales in upstate New York were basically flat.
Sales at the remaining Tops, after the sale of the stores in northeast Ohio, have stabilized and are profitable as a group, he said.
“We think that someone with some commitment on a local, entrepreneurial basis will have a nice grocery business up there,” he said, adding that he doesn't anticipate a sale to occur for the next several months. The stores have “attracted interest from all sides,” he added.
Schiano said he had always planned to retire in his late 50s, and this seemed like a good time “to go out on top of my game.”
Giant-Carlisle has seen same-store sales gains for the past 10 years, he said, and the chain has doubled its store count to 143 and tripled its volume under his watch.
Schiano held several operations and human resources positions at Stop & Shop before first joining Giant-Carlisle in 1981 as vice president, human resources. He left to work for Edwards Super Foods Stores and Bi-Lo before returning to Giant-Carlisle in 1997.
He plans to stay through March 15 to assist in the transition, while Schlicker, a 20-year Ahold veteran, will take over the CEO duties Feb. 1.