Giant Food LLC, which opened as Washington's largest grocery in 1936 and went on to become a dominant chain in Maryland and Virginia, will soon be operated out of New England. Its new chief executive will run it and its sister company Stop & Shop Supermarket Co. from Massachusetts.
The move is part of a strategy by Royal Ahold NV, the Dutch company that owns Landover-based Giant and Stop & Shop, to consolidate the managerial and administrative functions of the two supermarket chains.
The company announced yesterday that Richard A. "Dick" Baird, president and chief executive officer of Giant, will retire in July after 30 years working for Stop & Shop and Giant. Marc Smith, president of Stop & Shop in Quincy, Mass., will take over a new unit being created to oversee both companies.
Analysts predict that this could be the first of several lost executive jobs at Giant, which has 550 employees in its corporate offices. Stop & Shop is the biggest of Ahold's U.S. properties and has more influence within the company than Giant, analysts said.
"I can see the corporate office of Giant being greatly reduced down the road and everything will be shipped north to Massachusetts," said Mark Millman, president of executive search firm Millman Search Group in Owings Mills. "It's a sign of things to come, where you can expect more transfers, reductions and layoffs in the corporate offices of Giant." Millman said his firm has received several calls from Giant managers worried about their jobs.
Ahold officials said there will be cutbacks but that it's too early to determine their extent.
"Giant will still maintain their local presence with their separate identity, and we will continue to be as involved in the communities as we ever have," said Barry F. Scher, vice president of public affairs for Ahold USA.
"The appointment of this leadership team is one of the essential steps that will enable us to bring these companies together and ultimately improve our customer offering," Ahold President and CEO Anders Moberg said in a statement at company headquarters in Zaandam, the Netherlands.
Ahold began a reorganization last year after disclosing it had $1.1 billion in overstated profits relating to accounting irregularities at its Columbia-based U.S. Foodservice unit, which distributes food to restaurants and schools. It took a $3.1 billion write-off on irregularities late last year.
In October, Ahold announced that it would combine some functions of Ahold and Stop & Shop.
Ahold, which has 1,300 U.S. supermarkets, recently used the same strategy to combine the functions of Birmingham-based Bruno's Supermarkets Inc. with that of South Carolina-based Bi-Lo Inc, and Giant Food Stores of Carlisle, Pa., with Tops Supermarket in Buffalo.
Last month, Ahold announced it was closing its 100-person U.S. corporate headquarters in Chantilly, Va.
Jeff Metzger, publisher of Food World, a monthly food industry trade newspaper in Columbia, said the consolidation could free up money to help Giant improve its stores. He expects the company to sell its Landover building once it reduces its staff.
"It's an opportunity to reinvent how effective they can be in maintaining and improving some of the backroom administration functions," Metzger said. "It remains to be seen how that works once you essentially move the heart to New England."