Ahold Delhaize will invest $175M to upgrade Giant chain
- Ahold Delhaize announced it will open one new Giant store and remodel 24 others during the next two years in the Washington, D.C., region. The Dutch company operates 164 Giant stores.
- The remodeled stores will include amenities such as hot Asian food bars, fresh-squeezed juice bars, enhanced checkout zones and expanded natural and organic departments. The investment will create about 500 new jobs, the company said.
- "As the region's leading grocer, this announcement is part of our long-term commitment to deliver a consistently exceptional experience for our shoppers," Gordon Reid, president of Giant Food, said in a statement. "We look forward to updating and enhancing our existing stores and constructing both new and replacement locations to give our shoppers a fresh and imaginative selection, unique in-store experiences and superior customer service."
Ahold Delhaize has been aggressively refreshing its store base in an effort to remain competitive with other grocers, discounters like Walmart, Aldi and Lidl, and web giant Amazon.
It first doled out $168 million to update 105 Food Lion stores in the Norfolk, Virginia market this year as part of its "Easy, Fresh and Affordable" brand refresh — an initiative that so far has yielded an uptick in sales across the banner. A similar refresh is now underway at its 104-year old Stop & Shop banner with experience-focused features like wood smokers and community-table dining being added. It's no surprise that Ahold Delhaize is now pursuing a similar strategy with Giant.
Though pricey — each Food Lion store remodel cost more than $1 million, for example — a brand refresh is necessary both to maintain relevancy and stand out in the crowd. Store refreshes are a common tactic used by grocery store chains including Albertsons, Aldi and Southeastern Grocers to stay competitive while improving the in-store experience with more local, fresh fare along with other must-see attractions.
Giant has paved the way for a chain update with an advertising campaign aimed at re-connecting shoppers with the company. The ads focus on meaningful moments between family and friends while also emphasizing Giant's product assortment and easy shopping experience.
During its investor day in New York last month, Ahold Delhaize touted its strong connection to shoppers in East Coast markets, where it operates more than 2,000 stores. Its brands, lead by Giant, Hannaford, Stop & Shop, Food Lion and Peapod, currently hold the No. 1 or No. 2 position in 95% of the markets where it operates. But growth has been slow — in the past year Ahold Delhaize has increased its market share company-wide by 0.2%.
The grocer has benefited from the hundreds of millions in cost synergies it extracted from the deal. It has used much of those savings for the Food Lion, Stop & Shop and now Giant refreshes.
“With the merger substantially completed, we are now focusing on the next phase,” Frans Muller, CEO of Ahold Delhaize, told analysts last month. “We’ve built a platform for growth, with a structure in the organization that makes us fit to win, fit to grow and fit to gain market share, not only in bricks-and-mortar but also in omni-channel, which includes e-commerce. So, we feel we are very well-positioned to win.”
While the store remodels are likely to yield an uptick in sales in the near term, analysts have long questioned whether the company is doing enough to differentiate itself from its competitors. As stores undergo a similar remodel and carry products that cater to changing trends and consumer tastes, it remains to be seen how Ahold Delhaize will perform in the long run. Will local connections with chains like Giant be enough to retain customer loyalty as click and collect, e-commerce and other food options lure consumers or will shoppers increasingly feel less tied to one retailer?
“[Ahold Delhaize] continues to put Band Aids on the issues rather than addressing them head on,” Elley Symmes, a senior analyst with Kantar Consulting, told Food Dive. “The larger issue is that Ahold Delhaize banners kind of remain in this undifferentiated zone and what they are doing to address that in the longer term I have yet to see.”
Symmes noted that as commerce moves online, it will be increasingly important for brick and mortar stores to excel on service, a factor that has been key in cultivating customer loyalty for grocers such as Wegmans, H-E-B and Publix. Store remodels don't "get at the emotional trigger that drives long-term shopper loyalty,” Symmes said.
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