Ahold Delhaize is planning to shutter an unspecified number of stores under its Stop & Shop banner as part of its ongoing effort to improve the struggling supermarket chain’s performance, the Dutch retailer’s top U.S. executive in the United States said during an investor presentation on Thursday.
Stop & Shop will also take steps to strengthen its position with shoppers in the East Coast markets where it operates, including by investing in price reductions and store remodeling projects, Ahold Delhaize USA CEO JJ Fleeman said.
“The value proposition and pricing at Stop & Shop are simply not strong enough,” Fleeman said during Ahold Delhaize’s Strategy Day.
Stop & Shop has remodeled about half of its nearly 400 stores since it kicked off a revitalization campaign in 2018, according to Fleeman. The company’s remodeling efforts slowed during the COVID-19 pandemic, contributing to a loss in market share.
Stop & Shop has seen notable performance gains among stores it has renovated, and those stores are outperforming locations that have not been remodeled, according to Fleeman. In addition, the chain has built digital engagement so robustly that it has the highest e-commerce penetration among Ahold Delhaize’s five U.S. banners, he said.
But Fleeman said that even with those improvements, Stop & Shop is “not where we want to be or need to be” and has to change direction.
The chain “will focus on the markets that are most important, including those where the brand has strong density, holds a strong market position or has stores that are performing well,” Fleeman said.
“Stop & Shop has already evaluated its overall portfolio and will make difficult decisions to close underperforming stores to create a healthy store base for the long term,” he added.
Fleeman said the company has organized its strategy for revitalizing Stop & Shop around three core initiatives: improving the chain’s cost structure, optimizing its store fleet and bringing down costs for shoppers.
Stop & Shop will work to develop “a more efficient organizational structure” while focusing on keeping shelves well stocked, improving supply chain efficiency and providing “fantastic service in each of its stores,” Fleeman added.
Ahold Delhaize is planning to invest $1 billion in strategic price reductions during the next four years across its U.S. banners, which also include Food Lion, Hannaford, Giant Food and The Giant Company, Fleeman noted. The grocer also intends to increase income through its retail media operations and expand its e-commerce capabilities, he said.
