- The Washington Times - Wednesday, March 21, 2007

Giant Food is converting seafood and floral departments in more than one-quarter of its stores to self-serve stations.

About 55 seafood and 62 floral departments will be converted in “low-volume stores” in a process that began last month, said Giant spokesman Barry Scher.

Giant, the largest grocery chain in the Washington area with 190 stores, is working with its employees’ union, United Food and Commercial Workers, to find new jobs for the displaced employees, Mr. Scher said. He declined to say how many employees will be affected.

He said the move is part of an industrywide trend.

“The food industry has changed, and many of our competitors have moved from this particular model,” Mr. Scher said, adding that customers will see more consistent goods because they will be shipped to the stores daily.

Traditional grocery chains have been forced to find new ways to stand out as discounters such as Wal-Mart and high-end stores such as Wegmans and Whole Foods entered the grocery market.

“It’s real clear that the decision to go into a service facility [to prepackage goods before coming to the store] or do self-service has got an awful lot to do with the brand image you’re trying to create,” said Jim Hertel, managing partner of Willard Bishop, a Barrington, Ill., retail consulting firm.

Mr. Hertel said “fresh-format” stores, such as Whole Foods or Wegmans, want to be known for service and freshness, so they have improved their specialty departments. Discount chains such as Wal-Mart have gone Giant’s route and made their specialty counters self-service.

“Midtier, traditional supermarket operators … can find themselves in a quandary,” he said.

They might try to maintain in-store service but stretch the number of employees behind the counter — and the quality suffers. One of his clients, whom he declined to identify, found that seafood sales rose when they switched to prepacked stock because the quality was better.

In the Washington area, Giant and Wal-Mart may be alone.

Safeway, the second-largest grocer in the Washington area, said it is increasing the number of employees in its specialty shops, including seafood and floral, but declined to provide figures.

“It’s what we’re counting on to differentiate Safeway from the competition,” said spokesman Greg Ten Eyck.

Food Lion LLC — the fourth-largest Washington-area grocer, according to trade publication Food World — added specialty-department employees in some stores when it converted them to the high-end Bloom brand. Food Lion-branded stores did not have employees behind a seafood counter, and the stores that were converted to Bottom Dollar stock only frozen seafood.

Shoppers Food, the third-largest area grocery chain, declined to comment.

Whole Foods, Wegmans and Harris Teeter, which make up nearly 8 percent of the D.C. grocery market, according to Food World, all have employees behind their seafood counters.

Giant’s move is the latest attempt by parent company Ahold to boost shaky sales.

In the fourth quarter of 2006, sales at the Dutch company fell 3 percent to $12.7 billion. Comparable store sales at Giant-Landover fell 1.8 percent during the quarter and 1.2 percent over the year.

President and Chief Executive Officer Anders Moberg said in a November press conference that he planned to increase sales at its U.S. chains by 5 percent. The company planned to focus more on constant low prices and rely less on promotions.

Ahold also said it planned to reduce operating costs by $636 million over three years and cut administrative costs in half over two years.

Since the November announcement, Giant has been airing commercials touting lower prices on products such as household cleaners, baby products and produce.

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