Changes Coming to Ahold's Giants

JON SPRINGER

They share a name and an owner, and their operating areas brush up against each other in the Mid-Atlantic states. But Ahold's two Giants are anything but twins.

Giant-Landover — with stores in the Washington, D.C., area, and a headquarters shared with Stop & Shop in Quincy, Mass. — is unionized; tends to operate relatively small stores in dense, affluent markets; and, despite strong store volumes and market share, has suffered sales losses amid new competition in recent years. Giant-Carlisle, headquartered near Harrisburg, Pa., has by contrast grown its share and territory in recent years, reaching south and east toward the Philadelphia market with large stores and a non-union labor force.

Giant-Carlisle's sales performance in recent years has contrasted with that of its namesake, gaining 2.1% in fiscal 2006 and 3.2% in 2007 vs. respective annual sales declines of 1.6% and 1.1% at Giant-Landover.

A media tour with Ahold officials last month took SN to outposts of the Giant brands — three Giant stores around the Washington suburb of Potomac, Md., and a Martin's store run by Giant-Carlisle about 50 miles away in Elders-burg, Md., a western suburb of Baltimore. The tours illustrated how Landover is seeking to create a stronger brand image in order to capture a greater share of its customers' shopping and to win back customers who may have drifted away; and also how Martin's has built a successful offering behind a strong price message and value-added shopper amenities, and has readied itself for new initiatives.

While the banners exhibit differences in their positioning and approach, activity at Giant-Landover now suggests the chain would like to take on more characteristics of its smaller sibling. Such efforts are under way in its implementation of an everyday-low-price strategy through Ahold's Value Improvement Program — Giant-Carlisle has run EDLP since 1972 — and through store renovations and service offerings.

Robin Michel, executive vice president and general manager of Giant-Landover, said the branding effort builds on a legacy in a market where consumers have historically identified strongly with their local store.

“There is a real connectivity between the consumer and store, where people will say ‘That's my Giant,’ when talking about their store,” Michel said.

Ahold this year will have renovated about 31 Giant-Landover stores in the first year of a three-year, 100-store capital plan. The refreshed stores feature a new logo and bright new graphics that highlight pricing and food credibility. Signature prepared food items — such as crab cakes at stores in Maryland — are “second to none,” according Michel.

Giant-Carlisle's package of pricing and value-added shopping is on display at a 76,000-square-foot Martin's location in Eldersburg. The store, which opened in 2006, exceeds $1 million in weekly sales volume — nearly triple Ahold's estimates of neighboring competitors Safeway, located in an adjacent shopping center, and Shoppers Food Warehouse, which took over Martin's former location in the market, officials said.

Nearly all displays at the Eldersburg Martin's accompany a strong pricing message, said Peter Labbe, executive vice president of retail operations, during a tour of the store. Features include a rotating display of unique items in produce — it was pomellos when SN visited — which is accompanied by a card with information about the fruit and a recipe. Near the deli section, a display of pre-cut, pre-weighed and pre-bagged deli meats — a concept Giant-Carlisle absorbed with the purchase of Clemens Markets two years ago — has proven a hit. Dedicated aisles for natural and organic products, along with a large health and beauty aids section, bring excitement to Center Store, Labbe said. The in-store cafe, formerly operated by Bucks County Coffee Co., was recently relaunched under Giant's own Savor brand.

For the future, Giant-Carlisle has turned to Sander van der Laan, described by Ahold insiders as a rising star at its Albert Heijn chain. In remarks at the media event, van der Laan, who took over as CEO in August, pledged to uphold Giant's mission to be the premier customer-driven retailer in its markets. He said Giant has begun using insights gleaned from loyalty-card data to provide custom offers to seven distinct groups of shoppers. His strategic plan also includes an expansion into alternative formats, with a convenience store in the works to launch early next year.

“Almost everything you see here was the vision of Tony Schiano,” said Labbe of Giant-Carlisle's former chief executive, who retired a year ago. “What's interesting now is that we have a new leader who will take this company to the next level.”

GIANT VS. GIANT

The following are characteristics of Ahold's Giant-Carlisle and Giant-Landover banners: