Stop & Shop and Giant Food are in the process of delisting large numbers of products as part of the Ahold chain's Value Improvement Program (VIP). The rationale is carrying products on the shelf that don't move ultimately raises the cost of doing business for the chains that wind up getting passed along in higher prices to consumers. By culling slow movers, the chains believe that consumers will have access to products they most want and at prices they feel good about paying.
The SKU reduction initiative has taken place across the store even in departments such as produce where some competitors are looking to broaden selection to meet the needs of what is perceived as an increasingly diverse and culinary adventurous consumer base. In a press release, Stop & Shop and Giant claimed the VIP has enabled it to "enhance freshness by reducing transit and warehousing time in our supply chain."
Removing product from shelves opens up shelf space that Giant spokesperson Jamie Miller told The Associated Press the company was filling with "larger quantities of our more popular items."
Not all of Stop & Shop and Giant's customers are happy with the changes taking place.
Lynee Lee, 62, who has shopped at Giant for years said, "I can't stand it. There are certain things I've gotten used to getting, and it seems like every time I come in here, something else isn't here anymore."
Ms. Lee added, "A lot of my friends feel the same way."
While Stop & Shop and Giant are cutting back, neither chain is in danger of becoming a limited assortment store operator. According to Giant's Miller, the company still carries more than 50,000 items and is clearing space to add categories including books and DVDs to make it a "one-stop shop."
Buddy Mays, president of a United Food and Commercial Workers (UFCW) union local that represents workers at Giant, thinks the chain's strategy is flawed.
"I personally don't think it's the right direction," he said. "That's an opinion a lot of our customers and members have said to me. There was a day when Giant had the variety, but since Ahold has taken over they've become a price-driven company, not a service one."
David Livingston, principal with DJL Research and RetailWire BrainTrust panelist, said Stop & Shop and Giant are moving in a logical direction.
"I don't think they're taking risk," he told the AP. "What's happened with Giant is it's gone from a regional grocery chain to just a small portion of a conglomerate, and it's lost touch with the market and allowed the competition to get the better of (it)."
Discussion Question: Are Stop & Shop and Giant Food going in the right direction by discontinuing items and filling the space with a greater number of facings of top sellers? Will it bring the chains to the point where they can become perceived as being truly price competitive? Will the chain's perceived price competitiveness be negated as manufacturers continue to push through price increases in categories across the store?