Ahold USA Reorganization Plan On Track; 1,500 Updated At Hershey Meet

More than 1,500 vendors attended last month’s first ever Ahold USA Retail vendor meeting held at the Giant Center in Hershey, PA. The large crowd came to learn more about the major reorganizational effort that the company is currently undertaking in an attempt to bring its divisions in closer alignment while still providing the local needs important to the success of each regional chain.

Unlike previous vendor confabs organized by Ahold’s individual operating companies (Giant/Landover – Stop & Shop and Giant/Carlisle), this detailed meeting lasted most of the day (June 23) and featured nine executive speakers, each of whom addressed a key

function pertaining to the massive restructuring.

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From the outset, when Royal Ahold executive VP Larry Benjamin (who serves on the company corporate board and is COO of its U.S. platform) addressed the group, the focus was clear: Ahold USA is reshaping itself to become even more customer driven.

Benjamin illustrated his company’s strong financial position recapped Ahold’s 500 million euro share buyback program and reaffirmed the key points of the international retailer’s business model: build powerful consumer brands; drive identical sales growth; allocate capital to new growth; and operate from a lower cost base.

CEO of Ahold USA Retail Carl Schlicker explained the reasoning for the large-scale reorganization.The former Stop & Shop, Giant/Landover and Giant/Carlisle chief

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executive noted that the old system did not fully leverage the retailer’s relationship with its vendors, which inhibited its ability to invest in its consumers. The new structure

will also allow for improved local and community relationships, according to Schlicker.

While the Ahold USA restructuring will impact every department at the nearly $24 billion organization, there will be no department that will undergo as large and important a metamorphosis as merchandising. Heading that charge from Carlisle, PA will be Jeff Martin, executive VP- merchandising and marketing. Martin noted Ahold USA’s positive performance over the past year against competitors in all channels of trade in a rugged economy. However, he cautioned the vendors that, despite some positive news, the recovery will be prolonged and slow.

And in an important revelation, Martin felt that Ahold USA would be gaining an edge by deploying EYC (Engage Your Customer), a London based retail data analysis and decision-support information firm, to help with consumer insights.

If technology and analytics are going to serve as difference makers in Ahold USA’s new model, then Erik Keptner, senior VP marketing and consumer insight, will play a key role in that effort. Keptner, who will remain based in Carlisle in the new structure, addressed the topics of creating and maintaining customer loyalty, building consumer brands,

dealing with unique competitors from all channels within the 500 mile radius in which the four divisions operate. As the orchestrator of its marketing effort, Keptner also spoke of the importance of a common brand building platform (including its web-driven business, Peapod), the continuing effort to drive the value image across the entire retail spectrum and maintaining its connection with its consumers with charitable and community programs. Keptner added that another important component of success will be measured in the divisions’ ongoing efforts to provide consumers with relevant and

efficient communication through their in-store experiences. Keptner also emphasized the

potential power and importance of vendor collaboration.

Speaking for the first time at any Ahold USA related vendor meeting was Andrew Parkinson, president of the company’s Peapod unit, based in Chicago and doing business in the Windy City, New England, Metro New York and Baltimore-Washington.

In an area many vendors admitted they know little about, Parkinson delineated Peapod’s two operating models – “Warerooms” (functional at 21 Stop & Shop stores in New  England and Metro New York with about 8,000 square feet of dedicated space stocking

about 7,500 SKUs) where items are fresh picked at each store location and “Warehouses” (operating in the Chicago and Washington, DC markets) with 125,000 square feet of space carrying approximately 11,000 SKUs where proprietary Peapod trucks make home deliveries.

Parkinson also made the connection to the large vendor turnout by noting that Peapod customers represent a large percent of Ahold USA’s “primary” shoppers.

A part of his presentation was comprised of unveiling Peapod’s new “itemMaster”  technology, an open source for free product images and data. Parkinson noted that

itemMaster can provide suppliers with a one source image and product data resource that will capture product image in a high quality easy to use format. He added that Ahold USA’s merchandising team has begun the process that will eventually require all products sold by the retailer to be listed in the itemMaster catalogue.

Jeff Dichele, who will be relocating from Quincy to Carlisle as senior VP-non perishables merchandising, addressed four key areas as merchandising priorities: common merchandising platform; execution and flexibility; local relevance; and the presence of a powerful vendor collaboration. Dichele offered the clearest view of the new timeline of the reorg, stating that coordinated merchandising programs will begin on October 1 (joint planning has already begun). Once the fourth quarter is completed, all 2011 plans will be

negotiated with new Carlisle-based teams.

Direct store delivery (DSD) vendors will be working under a slightly different  arrangement. Kerry Lynch and Denise Mullen will serve as VPs and will oversee three category managers each. DSD deals will flow through the Carlisle and Quincy based teams and work closely with the four individual divisions’ sales teams. While plans and costs still need to be aligned and fine-tuned, the new DSD model will begin in the fourth quarter of this year.

On the fresh side of the business, headed by Steve Mayer, senior VP, who came to Ahold USA 13 months ago from Bi-Lo, a strong commitment to the “absolute freshest product available – from tree to mouth and from field to fork,” was reinforced. Mayer, like some  of his peers also stressed the importance of local relevance (crab cakes in Baltimore-Washington, lobster rolls in New England, etc.) from both the consumer and regional supplier perspective. Mayer also pointed out significant differences from the former

Perishable Procurement Organization (PPO) model to the current integrated model, noting more flexibility in negotiating with vendors.

Perhaps the most unsung executive to speak was Don Sussman, executive VP-supply chain. Sussman, a seasoned pro who at one time headed merchandising for the Stop & Shop – Giant/Landover Op-Co, made his points brief and concise. His “actions lead to results” takeaways were: cost reductions will lead to lower prices; fewer out-of-stocks

will yield higher sales; and fresh products will make customers “notice.”

He joked that the less he is noticed the more successful his results will be. While it’s true that much of supply chain efficiency seems like an invisible function, remember that Sussman oversees supply chain strategy in support of 744 stores and 20 warehouses (some direct, some owned by third party suppliers such as C&S). Products in the system are warehoused in three temperature zones and trucks that supply stores travel 66 million miles annually.

Veteran executive Jodie Daubert, who will serve as senior VP-sales development in the restructured alignment described her new duties this way: “…to deliver the best value equation to our customers by leveraging the strength of a centralized support organization while at the same time remaining locally relevant to our divisions and customers.”

While sales development is a new function in the Ahold USA lineup, Daubert, who most recently served as senior VP- perishables for Giant/Carlisle, will be able to incorporate

parts of her skills package from her previous experience. She asked the vendors to focus on four areas: alignment and advanced planning; local input execution and feedback; efficient promotion; and the objective of mutually successful partnerships.

“Our main goal never changes,” she asserted, satisfy our customers’ needs and sell more stuff!”

As the meeting closed, Jeff Martin responded to a question from the audience regarding the announcement of specific category managers and their duties. Martin said not all those slots had yet been filled and he hoped to have a comprehensive announcement

shortly. A check back with Martin at presstime (July 9) indicated Ahold USA was still finalizing its roster and will make an announcement in the coming weeks 

More than 1,500 vendors attended last month’s first ever Ahold USA Retail vendor meeting held at the Giant Center in Hershey, PA. The large crowd came to learn more about the major reorganizational effort that the company is currently undertaking in

an attempt to bring its divisions in closer alignment while still providing the local needs important to the success of each regional chain.

Unlike previous vendor confabs organized by Ahold’s individual operating companies (Giant/Landover – Stop & Shop and Giant/Carlisle), this detailed meeting lasted most of the day (June 23) and featured nine executive speakers, each of whom addressed a key

function pertaining to the massive restructuring.

From the outset, when Royal Ahold executive VP Larry Benjamin (who serves on the company corporate board and is COO of its U.S. platform) addressed the group, the focus was clear: Ahold USA is reshaping itself to become even more customer driven.

Benjamin illustrated his company’s strong financial position recapped Ahold’s 500 million euro share buyback program and reaffirmed the key points of the international retailer’s business model: build powerful consumer brands; drive identical sales growth; allocate capital to new growth; and operate from a lower cost base.

CEO of Ahold USA Retail Carl Schlicker explained the reasoning for the large-scale reorganization.The former Stop & Shop, Giant/Landover and Giant/Carlisle chief

executive noted that the old system did not fully leverage the retailer’s relationship with its vendors, which inhibited its ability to invest in its consumers. The new structure

will also allow for improved local and community relationships, according to Schlicker.

While the Ahold USA restructuring will impact every department at the nearly $24 billion organization, there will be no department that will undergo as large and important a metamorphosis as merchandising. Heading that charge from Carlisle, PA will be Jeff Martin, executive VP- merchandising and marketing. Martin noted Ahold USA’s positive performance over the past year against competitors in all channels of trade in a rugged economy. However, he cautioned the vendors that, despite some positive news, the recovery will be prolonged and slow.

And in an important revelation, Martin felt that Ahold USA would be gaining an edge by deploying EYC (Engage Your Customer), a London based retail data analysis and decision-support information firm, to help with consumer insights.

If technology and analytics are going to serve as difference makers in Ahold USA’s new model, then Erik Keptner, senior VP marketing and consumer insight, will play a key role in that effort. Keptner, who will remain based in Carlisle in the new structure, addressed the topics of creating and maintaining customer loyalty, building consumer brands,

dealing with unique competitors from all channels within the 500 mile radius in which the four divisions operate. As the orchestrator of its marketing effort, Keptner also spoke of the importance of a common brand building platform (including its web-driven business, Peapod), the continuing effort to drive the value image across the entire retail spectrum and maintaining its connection with its consumers with charitable and community programs. Keptner added that another important component of success will be measured in the divisions’ ongoing efforts to provide consumers with relevant and

efficient communication through their in-store experiences. Keptner also emphasized the

potential power and importance of vendor collaboration.

Speaking for the first time at any Ahold USA related vendor meeting was Andrew Parkinson, president of the company’s Peapod unit, based in Chicago and doing business in the Windy City, New England, Metro New York and Baltimore-Washington.

In an area many vendors admitted they know little about, Parkinson delineated Peapod’s two operating models – “Warerooms” (functional at 21 Stop & Shop stores in New  England and Metro New York with about 8,000 square feet of dedicated space stocking

about 7,500 SKUs) where items are fresh picked at each store location and “Warehouses” (operating in the Chicago and Washington, DC markets) with 125,000 square feet of space carrying approximately 11,000 SKUs where proprietary Peapod trucks make home deliveries.

Parkinson also made the connection to the large vendor turnout by noting that Peapod customers represent a large percent of Ahold USA’s “primary” shoppers.

A part of his presentation was comprised of unveiling Peapod’s new “itemMaster”  technology, an open source for free product images and data. Parkinson noted that

itemMaster can provide suppliers with a one source image and product data resource that will capture product image in a high quality easy to use format. He added that Ahold USA’s merchandising team has begun the process that will eventually require all products sold by the retailer to be listed in the itemMaster catalogue.

Jeff Dichele, who will be relocating from Quincy to Carlisle as senior VP-non perishables merchandising, addressed four key areas as merchandising priorities: common merchandising platform; execution and flexibility; local relevance; and the presence of a powerful vendor collaboration. Dichele offered the clearest view of the new timeline of the reorg, stating that coordinated merchandising programs will begin on October 1 (joint planning has already begun). Once the fourth quarter is completed, all 2011 plans will be

negotiated with new Carlisle-based teams.

Direct store delivery (DSD) vendors will be working under a slightly different  arrangement. Kerry Lynch and Denise Mullen will serve as VPs and will oversee three category managers each. DSD deals will flow through the Carlisle and Quincy based teams and work closely with the four individual divisions’ sales teams. While plans and costs still need to be aligned and fine-tuned, the new DSD model will begin in the fourth quarter of this year.

On the fresh side of the business, headed by Steve Mayer, senior VP, who came to Ahold USA 13 months ago from Bi-Lo, a strong commitment to the “absolute freshest product available – from tree to mouth and from field to fork,” was reinforced. Mayer, like some  of his peers also stressed the importance of local relevance (crab cakes in Baltimore-Washington, lobster rolls in New England, etc.) from both the consumer and regional supplier perspective. Mayer also pointed out significant differences from the former

Perishable Procurement Organization (PPO) model to the current integrated model, noting more flexibility in negotiating with vendors.

Perhaps the most unsung executive to speak was Don Sussman, executive VP-supply chain. Sussman, a seasoned pro who at one time headed merchandising for the Stop & Shop – Giant/Landover Op-Co, made his points brief and concise. His “actions lead to results” takeaways were: cost reductions will lead to lower prices; fewer out-of-stocks

will yield higher sales; and fresh products will make customers “notice.”

He joked that the less he is noticed the more successful his results will be. While it’s true that much of supply chain efficiency seems like an invisible function, remember that Sussman oversees supply chain strategy in support of 744 stores and 20 warehouses (some direct, some owned by third party suppliers such as C&S). Products in the system are warehoused in three temperature zones and trucks that supply stores travel 66 million miles annually.

Veteran executive Jodie Daubert, who will serve as senior VP-sales development in the restructured alignment described her new duties this way: “…to deliver the best value equation to our customers by leveraging the strength of a centralized support organization while at the same time remaining locally relevant to our divisions and customers.”

While sales development is a new function in the Ahold USA lineup, Daubert, who most recently served as senior VP- perishables for Giant/Carlisle, will be able to incorporate

parts of her skills package from her previous experience. She asked the vendors to focus on four areas: alignment and advanced planning; local input execution and feedback; efficient promotion; and the objective of mutually successful partnerships.

“Our main goal never changes,” she asserted, satisfy our customers’ needs and sell more stuff!”

As the meeting closed, Jeff Martin responded to a question from the audience regarding the announcement of specific category managers and their duties. Martin said not all those slots had yet been filled and he hoped to have a comprehensive announcement

shortly. A check back with Martin at presstime (July 9) indicated Ahold USA was still finalizing its roster and will make an announcement in the coming weeks