- The Washington Times - Tuesday, May 3, 2005

Giant Food plans to lay off as many as 500 local employees as the Landover grocer pulls out of the manufacturing business and shuts down several warehouses and distribution centers.

The plan, announced yesterday, is another change for the 69-year-old company, which has been trying to improve itself in the face of increasing competition.

This year, the D.C. region’s largest grocery chain will eliminate its three manufacturing operations and close several older warehouses.

It also plans to sell its 80-acre Landover warehouse and office complex by the end of the year. The company is looking at sites in Prince George’s County to house its 200 to 250 headquarters employees.

Giant officials say the changes are part of the company’s plan to streamline operations and put more time and money into new and existing stores. Giant merged with sister grocer Stop & Shop Supermarket Company, based in Quincy, Mass., last year. Both companies are part of Dutch food retailer Royal Ahold NV.

“All of these changes will advance our long-term goal of significantly improving our supply-chain operations, leading to greater service to our stores,” said Bill Holmes, executive vice president and general manager of Giant.

In the next two years, Giant plans to build at least 12 new and replacement stores and remodel 25 existing locations, creating about 250 management positions.

Mark Millman, president of Millman Search Group, a retail consulting firm in Owings Mills, Md., said Giant needs to enhance its stores because it is losing market share as more high-end competitors like Whole Foods Market and Wegmansexpand in the region.

“If they don’t upgrade their stores, they are going to continue to erode their business,” he said. “Because of the competition coming into this market, they have no choice.”

Giant opened in the District in 1936, moving its headquarters and distribution center to Landover in 1958.

It now operates 203 supermarkets in Virginia, Maryland, the District, Delaware and New Jersey under the Giant and Super G names, and has 25,000 employees.

The Super G stores in southern New Jersey will be transferred to Stop & Shop and will do business under that name within the next six months.

“If that works well, they will be encouraged to go more south and continue to convert Giants into Stop & Shop,” Mr. Millman said.

Giant’s dairy and ice-cube manufacturing plants, both in Landover, and the company’s ice-cream manufacturing facility in Jessup, Md., will be sold or closed. The company expects the employees working in the dairy facility to remain employed by the new owner-operator.

Giant is looking for alternative suppliers for its ice-cube and ice-cream business.

Giant’s warehouse and distribution facilities for its frozen food, health and beauty care, and nonfood products will be closed.

The company’s frozen-food distribution, which currently is handled in Jessup, will be transferred to a third party.

The health and beauty care and nonfood products will be transferred to American Sales Co. of Lancaster, N.Y., which is owned by Royal Ahold.

“The distribution centers being closed are very old and largely inefficient,” Mr. Holmes said. “It is no longer economically viable to continue to operate these smaller, outdated facilities.”

Since Royal Ahold bought Giant in 1998, other operations, including the bakery in Silver Spring, have been closed.

Giant will continue to operate its dry-grocery facility and perishables distribution center, both of which opened in 2003 in Jessup.

The 500 distribution, manufacturing and transportation employees were informed of Giant’s decision to cease those operations in staff meetings on Monday. The company says it will offer packages including severance, continuing benefits and career-center services.

Royal Ahold began combining Giant and Stop & Shop’s operations last year in an effort to restore its financial stability after it was engulfed in an accounting scandal at its Columbia, Md., U.S. Foodservice subsidiary that threatened to bankrupt the company.

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