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Thoughts on the retail outlook under the Trump administration

Ahold’s Boer cautiously optimistic; changes in labor policy ahead

This post is part of the 10 Things or Less blog

In a televised interview this week, Ahold Delhaize CEO Dick Boer expressed optimism that the new administration in Washington would continue the improvement the U.S. economy had shown over the last year, but said he wasn’t expecting fast nor dramatic changes.

“Economic improvement is always good for our customers, helping hopefully, more spending,” Boer told Bloomberg's Erik Schatzker in the interview Thursday at the World Economic Forum in Switzerland. “On the other hand we also know... the measures to be undertaken by the new president and a new administration will take some time.”

Boer said he was particularly optimistic about a healthier middle-class economy, but even that he noted isn’t likely to pay off immediately. “Once someone gets some more money in the bank, they don’t first spend it food,” he said.

Boer spoke hours after Ahold Delhaize released a trading update showing robust quarterly sales growth in most of its operations in Europe, and some of them in the U.S.: The Hannaford and Food Lion banners of the former Delhaize America continued their impressive victory over deflation, posting 2.2% comps despite 1.7% deflation. Its Ahold USA banners in the meantime reported a slight drop in comps (0.2%) but that also came against significant deflation, estimated at 1.2%.

Like Boer’s expectations of an improved economy, it’s been very gradual progress for Ahold USA, despite years of strenuous change inside. Sources say those stores have been beset by the combination of slow-growing Northeast markets with competition from volume-focused competitors like ShopRite, Market Basket and BJ’s; and price-focused competition in Pennsylvania and the Mid-Atlantic, where Ahold flies the Giant banner. This week, the company said it was moving veteran Don Sussman into the chief merchandising role previously held by newcomer Andrew Iacobucci.

Iacobucci was imported to the company by James McCann, the Ahold COO who set into motion many of the internal changes that are keeping Ahold’s brands in the game (lower prices, new produce, bakery and deli sets, etc.). McCann had also made the selection of a chief merchant one of his top priorities, choosing to fill the role himself until he found the right candidate, importing Iacobucci from Canadian retailer Loblaw last spring.

Labor changes on the way

One fairly certain assumption of the new leadership in Washington is cutting back or reversing changes made in federal labor law under the Obama administration.

President Trump immediately has the opportunity to appoint two members to the National Labor Relations Board (NLRB). Bradley Kafka, a St. Louis-based attorney with Polsinelli's labor and employment practice in St. Louis, said he expects those appointees would return the board to Republican control. He also expects the “Trump board” to reconsider, revise or reverse the actions of the “Obama board,” including controversial measures on “micro-unions,” joint employers and policies restricting employers from limiting their employee communications on social media.

Retail trade associations were up in arms over changes the NLRB made to rules over the pace of union elections. These so-called “ambush elections” became law on an Obama veto in 2015 over the loud objections of retailers.

That’s likely to be shut down too, Kafka said, although in practice, he admits ambushes have had little effect beyond burdening labor attorneys like himself. According to the NLRB, the volume of petitions did not rise since the change, and the success of union votes actually declined slightly.

“I do think quickie votes will change, but it’s less likely to change as quickly as some of the other things,” Kafka said. “The effect has not been significant in the number of elections or in results. It’s just a little more complicated a process.”

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