Grocer Tries to refresh image

Giant hopes to regain sales, share of market

July 21, 2008|By Andrea K. Walker | Andrea K. Walker,Sun reporter

A hand-held scanner that enables consumers to ring up purchases as they shop and a remote deli ordering system are among the innovations that Giant Food will bring to area stores as part of its latest strategy aimed at reversing eroding sales and regaining market share.

The region's largest grocery chain, which has been losing customers to new competitors, plans to announce these and other initiatives today as part of a plan to "reinvigorate our brand," Robin Michel, the grocer's general manager, said in an interview.

Landover-based Giant previously announced moves to spruce up stores and win back shoppers after its acquisition by Dutch conglomerate Royal Ahold, which consolidated its operations under New England-based Stop & Shop. Giant's reputation for high quality, customer service and employee morale suffered in the aftermath, at a time when it faced an onslaught of competition from upscale chains such as Wegmans and Whole Foods, and discounters that included Wal-Mart.

Michel acknowledged that the 73-year-old grocery chain had lost some of what made it the area's pre-eminent grocer, such as good service and personal relationships between customers and employees, and said Giant would revive some of its traditions.

"This was something that was held to be important for Giant for a long time, and we lost sight of that," said Michel, who grew up in Baltimore shopping at Giant and joined the company last spring.

"When people say to us that we have lost market share, I tell them that we have more competition than ever before," said Michel, who estimates that 19 food retail outlets have opened in the market in the past 18 months. "We have to be better than we ever have been before. I got that."

In addition to the new technology, Giant plans to install brighter, more current signs at all its stores. There will be a renewed emphasis on customer service, and employees will get trendier uniforms. Michel said she wants Giant to go back to a time when shoppers had personal relationships with store employees, many of whom have worked for the company for years.

The grocer will also look at offering new food options, such as single-serving desserts in the bakery and gluten- and wheat-free foods.

The 185-store chain will stick to a plan announced last fall to remodel or replace 100 stores in three years. Many of Giant's older supermarkets are smaller and outdated in comparison to newer stores with wider aisles. Some of the underperforming stores were closed.

Giant also reduced prices on most items.

The changes have not produced a turnaround, and Giant has continued to lose market share, according to an annual survey by the trade publication Food World.

Giant's share of the market slipped to 27.48 percent in the 12 months that ended March 31, down from 29.42 percent in the previous 12 months, according to the publication. Sales at its 40 area stores were $1.26 billion, down from $1.33 billion.

In the first quarter, sales at established Giant stores fell 1.2 percent.

Giant has said that it expects improvements this year in margins and sales as a result of the price reductions.

Michel said the new technology, which will be installed over several months, will make it easier and faster for customers to shop.

Customers will swipe their store bonus card at a console when they enter, then pick up whichever scanner wand lights up. Customers will scan items as they shop, with the wand keeping a running total. When they finish, shoppers download the total at a self-service checkout, scan in any coupons, pay and leave.

Martin's Food Markets in Carroll County, also owned by Ahold, use the technology, as do Food Lion's Bloom stores, which have a location in Odenton.

The deli system, which is in use at some Giant stores, allows shoppers to type a deli order into a computer, then pick it up when they're finished shopping.

Some of the moves are aimed at raising employee morale. Workers will trade their khaki pants and green polo shirts for new shirts in a shade of golden yellow or eggplant, and they will be allowed to wear their own shoes and jeans. Managers no longer will have to wear ties. The grocer also recently began offering employees 5 percent to 10 percent discounts on groceries.

"If you have happy employees, hopefully that translates into happy customers," Michel said.

Shoppers should see the changes at Giant stores Aug. 22.

Some grocery analysts who were not privy to details of the new moves say they are not convinced that there is much that Giant can do to win back customers. They say the supermarket chain might have waited too long to make changes.

David J. Livingston, who owns the grocery consultancy DJL Research, said changes in customer service and technology and remodeling stores do little to change customer perception.

"Usually, they just end up rehashing the same story about store remodeling, improving prices, improving service," Livingston said. "They're only raising the bar to what plain vanilla is, because the competition is getting better every day."

However, Michel predicted that Giant can capitalize on its many prime locations and loyal customers to regain market share in the coming years.

"They're right that we should have done it years ago," Michel said. "They're wrong that it's too late."

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