Ahold Delhaize USA (ADUSA) acknowledged that it will do some corporate staff trimming as part of a larger plan to become more omnichannel efficient while also trying to protect itself against the potential adverse impact of an economic slowdown in 2023.
However, the large Dutch-owned retailer denied growing industry speculation that it would be returning to the centralized merchandising model Ahold USA had deployed prior to its 2016 merger with Delhaize.
As for the job cuts, ADUSA would not disclose how many associates would be impacted but a close source pegged the number at “several hundred” including about 10 senior level leaders.
The changes will occur mainly on administrative levels across all of ADUSA operating platforms – but primarily at its Retail Business Services (RBS) and Peapod Digital Labs units. There will be no impact to stores or distribution centers. The changes are expected to be implemented by mid-April when JJ Fleeman replaces the retiring Kevin Holt as ADUSA CEO.
Like other large companies that have announced corporate layoffs such as Amazon, Microsoft, Google and most recently Lidl and Meta, there is deep concern about the state of the economy going forward. Grocery merchants – which are still generally posting strong comp store revenue, have seen unit sales fall and profits impacted – are looking to become as lean as possible in anticipation of even more severe economic challenges 9-12 months down the road.
Over the past six weeks, there have been increasing reports that ADUSA was considering moving away from the decentralized platform it adopted in 2018 in which Giant Food, Food Lion, The Giant Company, Hannaford and Stop & Shop began to operate their own individualized merchandising departments, allowing for more local decision making.
However, we were told that there is some nuance in how ADUSA’s merchandising leaders go-to market approach will be occurring. As part of both its “Connected Customer” and “Accelerate” initiatives released over the past 18 months, ADUSA wants its merchandisers/category managers to focus on the retailer’s strengths and diversity with its suppliers and brokers. That means aggressively seeking to assert more leverage (and potential trade funding) by highlighting ADUSA’s heightened clout as a true omnichannel merchant – growth of its brick and mortar stores, increased digital-driven sales and the potential of its newly formed retail media initiative.
There may have also been some confusion or fear that the company’s new consolidated pilot plan (begun in January) involving the high volume laundry/detergent and paper categories would be a precursor to an overall centralized merchandising shift. The new program, a collaborative effort among all of ADUSA’s platforms, incorporates common tools and systems to maximize the chain’s efficiencies and buying power. The pilot plan is not connected to a move to a broad central merchandising effort.
At Ahold Delhaize’s Q4 earnings call last month, CEO Frans Muller outlined a key part of the company’s “Accelerate” plan: “…With inflation remaining high, we will also continue to lean in and explore new opportunities to lower our costs. To that end, we are introducing a new group-wide initiative called ‘Accelerate.’ This initiative builds on our existing ‘Leading Together’ efforts to create more agile organizations, to capture more scale and empower our people to take action to drive efficiency. In particular, we will continue to evaluate additional savings and efficiency levers to streamline organizational structures and processes, optimize go-to-market propositions, increase joint sourcing and consolidate IT – with a clear priority to unlock resources to accelerate our ‘Save for Our Customers’ program and focus investments on high return projects. I am confident this proactive approach will make our organization stronger and ensure we can continue to deliver on our track record of driving consistent long-term value creation for all stakeholders.”
ADUSA’s “Connected Customer” strategy was first revealed by Holt at Ahold Delhaize’s Investor Day in November 2021.
“Let me describe to you what we mean by a connected customer. Our customers’ lives are constantly in motion. They’re looking for convenient and personalized solutions to save time in their day so that they can enjoy the moments that matter. Our strategy is built on providing relevant omnichannel solutions so our customers can enjoy the moments that matter in their lives. Our strategy is resonating. Over the last two years, we’ve seen significant digital growth across all segments of our customer base. In fact, we’ve seen our digitally engaged customers grow by 56 percent in the last two years.”
Beyond personalization, core components of the “Connected Customer” include a fully integrated omnichannel experience, local and trust, health and wellness, and private brands.
Our source emphasized that the upcoming changes at ADUSA were designed to maximize the results of both initiatives.
