A New Leader, A New Look

The new head of Giant Food stores has a sunny corner office at the grocery chain's headquarters in Landover. But Robin Michel doesn't expect to spend much time there.

"That's where our building is," she said during a recent interview. "But I'll be working in 184 stores."

That's a lot of ground to cover, and Michel said visiting each location has been her first priority since taking the newly created position of executive vice president and general manager in May, charged with overseeing operations at the Washington region's largest supermarket chain.

Michel takes the reins at a time of relative stability at the grocer. Parent company Royal Ahold has launched a price-reduction program designed to win back market share. It is spending millions of dollars over the next three years -- Ahold's largest investment in the chain to date -- to renovate 100 aging stores. And employees overwhelmingly ratified a new labor contract recently that will last for another four years.

"I don't get the sense that we feel like we're making up a deficit," Michel said. "If I can do anything, it's to resurrect what we did that made us successful."

Ahold executives say their strategy to boost revenue is well underway at Giant stores in the Washington area, where market share has dropped by 5 percentage points in three years, according to trade publication Food World. It has closed underperforming stores from its Landover division and expects to cut $500 million in costs by the end of next year. It has slashed prices on everything from tangerines to toilet paper in an effort to change Giant's image.

"Giant-Landover is starting from a worse historical trend in an absolute sense and in a dynamic sense," U.S. Chief Operating Officer Lawrence Benjamin said in a recent conference call with analysts. "We have often said that the Landover recovery, we think, will be more difficult."

The company reported yesterday that sales at stores open at least a year were down 1.6 percent, excluding gasoline, for the fiscal first quarter, compared with the same period last year. Ahold attributed part of the decline to lower pharmacy sales and its ongoing price cuts, and said it expects a rebound later this year.

Total sales across Ahold's chains in Europe and the United States were down 1.3 percent, to $11.9 billion, but profit grew 8.3 percent, to $411 million. Ahold chief executive John Rishton said the economic downturn and strong competition once again besieged Giant.

Bob Goldin, executive vice president at consulting firm Technomic, said the chain's troubles may be only partly self-inflicted. Specialty grocers such as Wegmans and Harris Teeter continue to open stores in the region, luring away shoppers.

"I think they're a reasonably solid company, but I don't think they excite their customers," Goldin said. "They'll survive. They're just not going to flourish unless they do some kind of reinvention."

The 100-store renovation plan -- dubbed Project Refresh -- is a major step. It has already hit five locations in the area, and a dozen more are expected to be finished by the end of summer. Michel toured a refurbished store in Bethesda recently, chatting with customers and noting the freshness of produce.