Ahold Accelerates Rollout of VIP Plan

Ahold said it will accelerate the rollout of its Value Improvement Program at Stop & Shop and Giant-Landover, adding frozen food to its list of categories that will undergo a review and price reduction by the end of the year. In a conference call discussing third-quarter earnings, the company said the VIP initiative, launched last September in the produce department and rolled out across

AMSTERDAM — Ahold here said it will accelerate the rollout of its Value Improvement Program at Stop & Shop and Giant-Landover, adding frozen food to its list of categories that will undergo a review and price reduction by the end of the year.

In a conference call discussing third-quarter earnings, the company said the VIP initiative, launched last September in the produce department and rolled out across nine other categories since then, has created a better price image for the store as a whole.

“Our overall store price perception is up at both Stop & Shop and Giant-Landover,” said Larry Benjamin, chief operating officer, Ahold USA.

The company said customer perception of both the price and the quality of produce have improved since that category went through the VIP process, which also involves a reduction in stockkeeping-unit count. About 30% of produce SKUs were eliminated — resulting in reduced shrink, the company noted — and 25% of SKUs overall have been cut. Comparable produce sales in terms of units have improved, the company said, although it declined to provide details about dollar volume.

The company said it expects the rollout of VIP to be 70% complete by the end of this year and fully implemented by the fall of 2008.

Operating income at Stop & Shop and Giant-Landover was $150 million in the third quarter, down about 9% from year-ago levels, while year-to-date operating income slid 20%, to $539 million. At Giant-Carlisle, operating income was up about 15%, to $38 million in the quarter, and up about 13.5%, to $151 million, through three quarters.

SN reported sales results for the company in the Nov. 5 issue.