Dive Brief:
- Ahold Delhaize announced plans to merge its Stop & Shop New York Metro and New England divisions, according to a company statement.
- “Having a single brand organizational structure dedicated to Stop & Shop will strengthen the brand and will ensure it can better leverage its brand to serve the unique needs of customers,” the company stated.
- The company has also created an operational support organization called Retail Business Services, which will serve companies throughout the Ahold Delhaize portfolio.
Dive Insight:
When Ahold joined with Delhaize last summer, it created one of the largest supermarket chains in the U.S. with a combined 2,000 stores along the East Coast. With traditional supermarkets under increasing pressure from alternative formats and other large retailers merging, the two companies clearly saw strength in their size.
But that size won’t work for them without operational efficiencies to match. The merging of Stop & Shop’s two divisions indicates a desire to unify the brand — and more importantly to unify operations. It’s an inter-company merger most likely motivated by the same forces that drove Ahold and Delhaize to merge — namely, synergies and cost savings.
The challenge will be negotiating the two divisions’ competencies. The New York Metro division was created to serve a population-dense area of the country. How will its business practices square with Stop & Shop’s more traditional New England division?
The creation of the Retail Services Division is another interesting move aimed at unifying the company and making it more efficient. The service seems to be an in-house consulting firm that will do everything from troubleshoot problems to share data across Ahold Delhaize’s numerous brands.
Like Stop & Shop, many of Ahold Delhaize’s stores are large, traditional formats. In decades past this size was a good thing, but these days, with shoppers more inclined to make short fill-in trips, smaller formats are winning consumer dollars.
So on the one hand, size is a liability for Ahold Delhaize. But through its mergers and other efficiency measures, the company clearly wants to use size to its advantage.
