- The Washington Times - Monday, April 28, 2008

BALTIMORE — It started off with a few white tags here and there, barely noticeable to the average shopper. But if you’ve been to your neighborhood Giant in the past several months, you’ve probably noticed these tags now dotting nearly every aisle.

They mark discontinued products and make up one of the more visible links in the chain’s 18-month effort to revamp its stores and focus on lowering its bottom line. Called the Value Improvement Program, the stores are streamlining their inventories and discontinuing the bottom-selling products to make room on the shelves for larger quantities of fewer products.

“It takes some costs related to the supply chain out of the business, and we can order larger quantities of our more popular items,” said Giant spokesman Jamie Miller. “By simplifying the inventory, it reduces the operating costs, and we can pass that on to our customers.”

Giant announced its overall plans for a makeover — which included remodeling 100 stores in the Baltimore-Washington area — last fall. The overhaul is the largest investment since Dutch food company Royal Ahold NV bought the supermarket chain for $2.7 billion in 1998. Quincy, Mass.-based Stop & Shop, Ahold’s other U.S. supermarket chain, also implemented a value improvement program last fall, but it did not include as massive a remodeling.

But not all customers like this new shopping experience. Lynne Lee, 62, said she has shopped at Giant for years but is becoming increasingly frustrated with the variety of products at the store.

“I can’t stand it,” she said, standing in front of the Catonsville store on Old Baltimore Pike. “There are certain things I’ve gotten used to getting, and it seems like every time I come in here, something else isn’t here anymore.”

Ms. Lee said that many of her low-fat options were disappearing off the shelves and that Giant no longer carried her favorite cereal. She said that if she had to go to other stores to get certain items, she might stop going to Giant altogether.

“A lot of my friends feel the same way,” Ms. Lee added.

But Ms. Miller, who would not reveal Giant’s projected savings in operating costs for competitive reasons, noted that the store still carries more than 50,000 products and that shelf space had to be cleared as it adds more items such as books and DVDs to make Giant a “one-stop shop.”

Buddy Mays, president of a local chapter of the United Food and Commercial Workers union, said it made sense to discontinue products that don’t sell, but worried about what that move meant for the long term.

“I personally don’t think it’s the right direction,” said Mr. Mays, who has been with the union for 36 years. “That’s an opinion a lot of our customers and members have said to me. There was a day when Giant had the variety, but since Ahold has taken over, they’ve become a price-driven company, not a service one.”

Bruce Jones, 55, said he now does most of his grocery shopping at Wal-Mart Stores Inc.’s supercenters and only shops Giant for its produce selection.

“Price is the main issue for me,” said the Catonsville resident. “Giant is a lot more expensive.”

Those who follow the grocery industry say Giant’s revamping is necessary as its market share has declined in recent years. Competitors such as Wegmans Food Markets Inc., Trader Joe’s and Harris Teeter have brought more variety to the landscape while Wal-Mart offers consumers a lower-priced option.

“I don’t think they’re taking risk,” said David J. Livingston, a grocery store consultant based in Wisconsin. “What’s happened with Giant is it’s gone from a regional grocery chain to just a small portion of a conglomerate, and it’s lost touch with the market and allowed the competition to get the better of [it].”

Others said that although Giant could probably never beat the prices of Wal-Mart, a non-union employer, most customers wouldn’t mind fewer brand choices if it meant lower prices.

“If you look at what consumers say versus what they vote for with their dollars, I think that what they’re voting for is where Giant is trying to remain competitive,” said Gary Karp, executive vice president of Technomics, a Chicago-based market research firm.

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