Giant's HQ shift to bring layoffs

Unknown number to lose administrative jobs

Rest of grocery chain unaffected

Firings stem from moving of base from Md. to Mass.

April 09, 2004|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

Giant Food LLC, the area's largest supermarket chain, said yesterday that it would cut some of its 650 corporate administrative positions over the next few months.

The announcement comes as Giant prepares to move much of its corporate operation to Massachusetts, where it will consolidate administrative and managerial functions with a sister company, Stop & Shop Supermarket Co. in Quincy, Mass. Many industry experts said layoffs were inevitable.

Giant officials said they would not know until the end of next month or early summer how many people would lose their jobs.

The company will try to transfer some positions to other holdings of Royal Ahold NV, the Dutch company that owns Giant and Stop & Shop. Positions could be shifted to Stop & Shop, U.S. Foodservice in Columbia or Giant Food Stores of Carlisle, Pa., also owned by Ahold.

"We don't know the numbers yet," said Barry F. Scher, vice president of public affairs for Ahold USA. "A lot of people will be impacted, but quite a number will continue to work in Landover."

The layoffs will not affect workers at Giant stores or distribution centers, and company officials emphasized that customers should notice few changes at their neighborhood stores.

Some analysts predicted that the job losses could mean a slow closing of the Landover office.

"It appears to be the beginning of the end for the corporate offices of Giant Food Maryland," said Mark Millman, president of executive search firm Millman Search Group in Owings Mills. "Inevitably it appears the entire function will be eliminated over a period of time."

Scher said that although the number of employees will eventually shrink, certain departments such as labor relations, real estate, consumer affairs, public affairs and store operations will remain in Landover.

The company also announced yesterday that Bill Holmes, the executive vice president of sales and operations at Stop & Shop, will move to Landover to become executive vice president and general manager of Giant.

"We will still have some administrative functions in Landover, and all these changes will not affect stores or distribution centers at all," Scher said.

The reorganization at Giant is part of a larger strategy by Ahold to consolidate and sell parts of the company as it recovers from an accounting scandal involving financial irregularities at U.S. Foodservice, which distributes food to restaurants and schools. Ahold reported last year that it had $1.1 billion in overstated profit and it took a $3.1 billion write-off on irregularities.

Giant President and Chief Executive Officer Richard A. "Dick" Baird announced in February that he would step down in July after 30 years of working for Giant and Stop & Shop. Mark Smith, president of Stop & Shop, was appointed to take over a new unit that would manage both grocery chains.

Some analysts said that Giant is doing what it needs to survive in an increasingly competitive supermarket industry. Consolidation allows the grocers to negotiate as bigger entities for lower prices from manufacturers. Many of Giant's competitors, such as Safeway, have already combined functions.

Ahold, which has 1,300 supermarkets, has combined functions of its Birmingham, Ala.-based Bruno's Supermarkets Inc. with those of South Carolina-based Bi-Lo Inc., and Giant Food Stores of Carlisle with Tops Markets LLC in Buffalo.

"With computers today, it makes sense to consolidate to compete," said Dave Goggin, president of Key Performance Innovators, a retail consulting firm in Ellicott City. "You have to be able to cut your administrative costs to be able to compete with Wal-Mart and other low-cost operators."

Millman said that transferring to other locations won't be practical for many of Giants employees. "They are really not viable options for those people," he said.

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