Ahold Delhaize on Monday announced a series of structural changes it said would support stronger local supermarket brands while working to develop scale and leverage combined sales.
The announcement follows last month’s establishment of Retail Business Services, a new entity providing central brand support for all U.S. retail divisions of Ahold and Delhaize, which completed a merger last year. That group, to provide financial services, not-for-resale procurement, legal, information technology and human resources services, will allow regional brand offices to dedicate focus on strengthening local market positions and forge deeper customer relationships, Kevin Holt, COO of Ahold USA, said in an interview with SN Monday.
Each of the local brands will have distinctive commercial strategies tailored to their markets with dedicated resources including category merchandising, assortment, pricing, promotions, marketing and formats teams, Holt said.
“We designed these moves to try and develop the scale and leverage of a $40 billion, East Coast retail organization with No. 1 and No. 2 market shares in most of our markets and at the same time have a razor-sharp focus on local brands,” said Holt (left).
As part of the changes Ahold USA will combine the Stop & Shop New England and New York Metro divisions into a single division to be based in Quincy, Mass., led by current Stop & Shop New England president Mark McGowan. Fresh Formats LLC, the separate company that designed and established the bfresh small-box concept, is also folding into the Stop & Shop division, Holt said.
Ahold USA last month promoted Stop & Shop Metro New York president Don Sussman to EVP of merchandising and said Bob Yager would lead the New York division as SVP. Ahold established the New York Metro division in 2009, focused on growing share in that consolidating market.
The combined Stop & Shop entity would operate about twice as many stores as the Giant Food and Giant/Martin’s brands also under Ahold USA. Those divisions, as well as the e-commerce site Peapod, will continue under their present leadership and in their current offices, Holt said. Delhaize America will continue to operate its Food Lion and Hannaford brands under current presidents Meg Ham and Mike Vail, respectively.
Frans Muller (left), acting COO of Delhaize America, said he anticipated continuing in that role at least through the establishment of the new structure, which is expected to be completed early next year.
Holt said he anticipated that business units within RBS would “stand up” through the course of the year, mentioning that private label would be among the early areas where stores could show benefits of the new arrangement. He added that the company was “just getting into discussion” on harmonizing distribution methods throughout the company, anticipating that current arrangements whereby Delhaize self-distributes most goods and Ahold outsources much of its distribution, would continue in the near term.
In addition, the company said the following executive appointments in the U.S. will become effective when the structuring is complete early next year:
Greg Amoroso, EVP and U.S. CFO; and Linn Evans, EVP and chief legal officer, will report to Delhaize America. They currently serve in similar roles for Delhaize.
Reporting to Retail Business Services will be Kathy Russello, EVP people systems and services; J.J. Fleeman, EVP, commercial systems and strategy; Chris Lewis, EVP supply chain; and Paul Scorza, EVP and CIO. Russello and Scorza currently serve similar roles for Ahold USA; while Fleeman and Lewis have similar roles currently with Delhaize America.
Muller said the changes underway represent a part of the combined company’s goals to realize around $500 million in merger synergy savings by 2019. Around 60% of those savings would be realized in the U.S., which is about the percentage of global revenues the U.S. contributes.