All-Inclusive

MARK HAMSTRA

Next year, when Ahold USA sends out employee surveys, it may be going beyond bilingual.

The retailer, parent of the Stop & Shop, Giant of Carlisle and Giant of Landover chains, is considering sending out the surveys to its workers in as many as four or five different languages.

“We want to know what everyone thinks,” said Bhavdeep Singh, who recently was named executive vice president of operations at the company. “We don't just want to know what 80% of the population thinks, or what 90% of the population thinks. We want to know what 100% of the population thinks.”

The effort is emblematic of the holistic approach to diversity at Ahold, wherein the company seeks to weave diversity and inclusion into all of its processes.

In an interview with SN while he was still the head of human resources at Ahold, which is based in Quincy, Mass., and Carlisle, Pa., Singh explained that defining diversity at the company begins with what he called diversity of thought.

“People think differently by virtue of their upbringing, by virtue of their background, by virtue of where they've lived, by virtue of all the things that make them an individual,” he said. “When we look at diversity, we start with diversity of thought, and how do you create a culture that embraces that diversity, across the entire organization — there really aren't any lines or boundaries, whether it's people, whether it's product or whether it's vendors.

“It's really about creating a culture of inclusion, so that regardless of where you've been, what you've done, where you are from, what you speak, how you eat, how you live — we see a value.”

Ahold's comprehensive approach to diversity as a component of all its processes, from procurement to executive leadership, has earned it national recognition, including being named a Top 50 company for minority businesses by DiversityBusiness.com.

But as Singh and others explained, Ahold is not resting on its laurels. It continues to expand its efforts to be a more inclusive organization, with a new diversity council in the works and more efforts surrounding recruitment of women- and minority-owned suppliers.

In June the company held its first companywide supplier diversity event, combining the procurement teams of the Stop & Shop/Giant-Landover division with those of the Giant-Carlisle division. The Local/Diverse Business Opportunity Fair accommodated more than 140 vendors.

In addition, under the aegis of James Sturgis Jr., Ahold USA's director of supplier diversity and trade relations, the company has been seeking to expand its reach in terms of diversity of not-for-resale vendors, such as firms that provide construction and maintenance services.

Singh, who joined Ahold about a year ago after spending the previous five years as a chief executive officer of large companies in India, noted that responsibility for diversity at Ahold does not fall on any one individual, however. It is something that is shared by the entire staff.

One of the pitfalls companies sometimes stumble into, he said, is appointing a single person to spearhead diversity initiatives, when in fact it needs to be embraced by all of senior leadership to set the tone for the organization.

“We have a culture of mutual accountability,” Singh explained, citing as an example that while store managers in ethnic neighborhoods have an obligation to ensure that the staff reflects the customer population, Ahold also has an obligation to those managers to ensure that it can supply those customers with an ethnically appropriate product mix.

“We are looking at diversity in terms of whether or not we have what we need — do we have what they want in the aisle, do we have employees who understand the customer, do they speak the language, do they know what their daily needs are, and what their needs are on specific holidays,” Singh explained. “That's where we hold our managers accountable — do they meet the needs of our consumers.”

Singh said he believes Ahold is already “in a good place” when it comes to diversity, but the diversity council should help the company advance this aspect of its mission even further. He defined the mission of the council as falling into four separate buckets:

As currently planned, the council would include a core group of senior executives, along with representatives from different functional areas of the company, and representatives from different levels of the organization.

In addition, the company has discussed occasionally bringing in guests from outside of Ahold to address the council.

“We want to hear about what they see when they go into our stores, and what do they hear when they talk to our associates,” Singh explained.

Breaking Stereotypes

Singh sees several challenges when it comes to making the company more inclusive, and many of them are not unique to Ahold.

“I think we face a challenge around what this industry represents,” he said, citing as an example the fact that many potential workers may have a limited view of the career potential in retail. Women in particular, he said, might grow up associating retail career opportunities with working at a cash register, for example, because that is what they see every day.

“The reality is that food retailing is a very, very sophisticated business,” Singh pointed out. “We have [tens of thousands] of items per store, we have perpetual ordering systems — we are a business that is driven by technology.

“So I think we have to knock down some of the perceptions that are out there. How do you do that? You do it with some very targeted recruiting, and you look at the talented individuals that come from different backgrounds and different perspectives, and give them the opportunity to grow.”

In addition, he cited the importance of recognizing instances of successful inclusionary practices at the company.

“You make sure that when you have some successes, you talk about it, and make a big deal about it.”

In addition, he pointed out, diversity initiatives often involve change, which can often be challenging for organizations to accept.

One of the keys to creating a culture of inclusion, he said, is to create initiatives that are sustainable and that can be monitored. It also must become woven into the fabric of the company.

“If your organization believes in creating a culture that embraces diversity, it's not something you talk about at the annual diversity conference, or at a diversity meeting,” Singh said. “It's something you talk about 365 days a year, seven days a week and 24 hours a day.

“This is one of the most powerful things we have, to constantly talk about diversity in our approach, and ask ourselves, is any initiative going to come across as exclusive, and not give everyone a fair shot?”

The culture of diversity and inclusion is often reflected in the small details of everyday operations at the company, Singh explained.

“I think you continue to move this agenda forward with big initiatives, but you do it with small initiatives as well,” he said. “A lot of it has to do with what happens at 2 o'clock in the afternoon, when an applicant walks into a store and he doesn't speak English that well. What does that interaction look like? Or what if the applicant has never worked in retail?

“So it's the big things, and it's the little things we do every day, all day, 365 days a year.”

Grize Was Catalyst

Gary Preston, a former executive vice president of human resources at Ahold USA who now has his own executive recruiting firm, Philadelphia-based Preston & Reffett, said the focus on diversity as a concerted activity at Ahold USA began about the year 2000.

“When [former CEO] Bill Grize came into the Ahold USA organization, he made it a personal mission,” Preston explained. “He felt very strongly that the make-up of the company should reflect the customer base that it serves.

“To say that he was passionate about it would be an understatement. He believed in it to his very core. To him it was not just ‘it's good for business’ — he believed that it was the right thing to do, and he used every opportunity to champion the effort.”

Preston said Grize, who retired from Ahold in 2005 and died last year, admired what some companies in the CPG industry were doing with diversity, including PepsiCo. He helped get the Network of Executive Women off the ground, and had one of Ahold's women HR executives, Kimberly Betts, work with NEW to help launch it, Preston explained.

“He was willing to make resources available to make things happen,” Preston said. “Without Bill as the early champion, I don't think Ahold would have made as much progress so quickly. Once his message was institutionalized, the effort was able to sustain itself.

“I believe that they have been successful,” he said, “because the leadership understands the value and believes in it.”

Singh said he believes “a lot of good work has been done” in terms of diversity at Ahold.

“I think the organization is focused on doing the right thing, and I think we have a good set of values at Ahold,” he said. “As we look forward, it's no longer about how we stand against the store next door, it's about how does this become one of the pillars that the organization stands on.”

Supplier Diversity

One of the key areas where Ahold's focus on diversity manifests itself is with its suppliers.

It works to identify minority- and women-owned suppliers, give them opportunities to present their products to the company's buyers, and then it continues to provide support in the form of strategic and promotional guidance to help those companies stay on the shelf.

“Our goal is to be known as the place where women- and minority-owned businesses can be given the best opportunity for success,” said Jodie Daubert, senior vice president, sales development, Ahold USA. “It's not necessarily about a dollar goal or particular numbers — it's about being known as the best opportunity for those businesses.”

Heading the effort to make sure those businesses have good opportunities at Ahold is Sturgis, who works with the local chapters of national supplier diversity organizations to help identify potential suppliers that could benefit Ahold's business, get them in front of the company's buyers, and then help them do what they need to do to achieve success on the shelf.

“Typically when you hear folks talk about supplier diversity at other companies, you hear them talk about the amount of money they spend with diverse suppliers, which can make it kind of difficult to communicate the business case for supplier diversity,” said Sturgis. “For us, it's about satisfying our customers at the end of the day. No matter what we do, the customer is who is most important to us.

“If we can figure out what our customers want and how that can help us to fuel sales, that combination is what's going to satisfy the business case [for diversity].”

To help identify potential suppliers, Ahold works with national groups like Food Marketing Institute and the National Association for the Specialty Food Trade, as well as local chapters of national groups that specialize in minority- and women-owned businesses, such as the National Minority Supplier Development Council and the Women's Business Enterprise National Council.

“Probably the most effective thing for us is the strategic partnerships we have with nonprofits out there,” Sturgis explained. “They create the networking opportunities and then we create the follow-up afterwards.”

The groups help Ahold recruit attendees for its supplier diversity and small-business trade shows, which it holds several times a year. At those events, suppliers are guaranteed an opportunity to meet with Ahold's merchandising teams and present their case.

One woman-owned business that secured a position on Ahold's shelves through such an event is Philadelphia-based Be Satori, makers of Ecozip plastic bags. The company launched its product in Stop & Shop a little more than a year ago, and recently rolled the product into both Giant-Landover and Giant-Carlisle.

The product is a multi-compartment plastic bag that allows consumers to keep foods separate in a single container.

“They were the first to give us an opportunity to be on the shelf,” said Mariagrazia LaFauci, CEO of Be Satori, in an interview with SN. “They offered their customers innovation in a category which their buyer at the time felt was very stale.”

She described a positive experience working with Sturgis and his team, saying they do “an amazing job” with encouraging supplier diversity.

“It can be very difficult to be seen or heard if you are a small company,” she said. “I think small businesses might not always have the experience of knowing how to service a big account. In our case, we had never done business with a big retailer.”

She said Ahold has been able to supply her company with the sales data and other information it needed to be successful.

“Having the information accessible was a big step — being able to know how to service a big customer. James and Larry Vereen [manager of supplier diversity and trade relations] did an amazing job in providing that.”

LaFauci said one of the things she has learned by working with Ahold was how to plan to promote the business.

“How are you going to perform in that environment? What are you going to be doing in terms of promotions, and incentives, and what can you offer to help stimulate purchasing on the consumer level?” she said. “That is my first priority — how is Ahold going to move the product off the shelf.”

LaFauci said she worked with Ahold to develop some initial promotions to spur trial, and she recently worked out a promotional schedule for 2112 to continue to spur sales.

Since launching in Stop & Shop, LaFauci has expanded into several other retailers, including Hannaford Bros., The Fresh Market, Duane Reade and Roundy's.

“Once one retailer opens up the door, it makes it easier for other retailers to follow suit,” LaFauci noted.

“Ahold took a shot with us, and it paid off. They are opening up opportunities, not only for themselves, but they are giving back to the community. They are allowing small businesses to grow, just by opening up the door. Most retailers won't open up the door unless you are already on the radar.”

Sturgis agreed that seeking out small, minority- and women-owned businesses can be beneficial both to the suppliers themselves and to Ahold.

“When we bring these companies in to trade fairs, we are looking for companies that might not typically be able to get to the buyer,” he said. “Often, we find those companies have items that maybe a competitor is selling, or the mom-and-pop shop down the street is selling, but it fills a hole on our shelves.”

Sturgis said the company tracks the performance of these smaller vendors using data from Nielsen Co.

“What we find is that we outpace the market when it comes to diverse suppliers,” he said. “It has given us the opportunity to grow sales and grow market share in our geographic territory.”

One significant challenge for these small businesses is their lack of financial resources for promotional activities vs. the large suppliers, Sturgis explained.

“At the end of the day, the products have to move, so they have to get creative in terms of how they spend their money so that these products can in fact move,” he said. “We try to help them with that, using some of the promotional vehicles that we have internally.”

In addition, he said he and his team can also help guide suppliers in terms of how to spend their promotional funds most efficiently.

Meeting Strategic Needs

Daubert pointed out that diverse suppliers must fit within the strategic priorities at the company — such as Ahold's effort to expand its private label — in order to be successful.

“Corporate brands is a huge piece of our strategy, so if we can link that with our supplier diversity efforts, and find a women-owned or a minority business to provide our own-brand products, we are filling both needs, and that helps get the product through the organization,” she explained.

Sturgis noted that Ahold recently found one such supplier, a minority-owned tortilla maker based in Massachusetts, to supply store-brand tortillas for the company.

Another example of a minority-owned company that got its start at Ahold USA through the efforts of Sturgis and his team is Bell's Famous Chili, a Baltimore-area company that had developed a fan following at Baltimore Ravens football games before Sturgis worked with the company to get its product ready for retail and introduce it on the shelves of the Giant-Landover division.

The company's turkey-and-black-bean chili — a healthier-for-you product — also fit within Ahold's strategic goals, Sturgis explained.

Daubert pointed out that the processes for the merchandising teams don't really differ whether the company is buying from large, multinational suppliers or smaller, minority-owned businesses.

“We don't want to take on a different process or a different approach,” she said. “We want to focus on what's best for the customer.”

Daubert explained that Ahold doesn't impose quotas for its buyers to find such businesses, but instead works to ensure that the company is providing opportunities for those vendors to make their case.

“The way we hold the teams accountable is to make sure the teams are providing opportunities to these vendors, and at the end of the day, it is all about the customer,” she said. “We don't decide the products that go on the shelves and stay on the shelves — the customers decide that.

“Our teams make sure these vendors have every opportunity to be successful, and James and his team work with them to make sure they are providing the opportunities. In the end it's the customers who determine how successful they are.”

Sturgis said his team acts like “an extension” of the Ahold merchandising teams.

“We are networking with a bunch of folks that they might not normally have the opportunity to network with,” he said. “So if we can bring some folks to the table that they might not otherwise see, it can only help them as they look at their categories.”

The company's goal in terms of supplier diversity, Daubert said, is to be “known as the place where women- and minority-owned businesses can be given the best opportunity for success.”

She said the company has received a lot of positive feedback from suppliers who have been assisted by Sturgis and his team.

“We continue to receive feedback from these suppliers that they have an advocate on the inside with James and his team,” she said. “They really feel very connected to the organization, and when they come in and meet with the buyers who make those decisions, they feel very well prepared for those sessions.”

“One of the things we are most proud of is the relationship we build with small suppliers to help them navigate our system, to coach them along the way, and give them access to some tools, and even some consumer data, that helps them grow their businesses,” said Tracy Pawelski, a spokeswoman for Ahold USA.

She noted that the company is willing to have suppliers start out small — in just a few locations, for example, until they can ramp up their business to potentially roll out to the company's 750 locations.

“There have been many success stories, about how suppliers have come in through the small-business and supplier diversity trade show, and then all of a sudden they are in 750 stores,” Pawelski said.

Daubert also pointed out that Ahold often receives requests from large suppliers about Ahold's procurement efforts around diversity, not because they are interested in getting their products on the shelves, but because they want to learn how Ahold has achieved success in that area so they can further develop their own diversity programs.