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Ahold, the Dutch-owned company that has been struggling to get out from under a $1.1 billion dollar accounting scandal and declining sales, will look to gain efficiencies in its US operations by handing over management responsibility for Giant Foods in the Washington, DC-area to Stop & Shop Supermarkets in Massachusetts.

The move reportedly puts at risk hundreds of jobs at Giant, which has been operating in the capital region for almost seven decades. The company says that the Giant banner will remain intact, but that Stop & Shop will review every departmental function, closing down everything that can be replicated in Massachusetts. Likely targets include Giant's information technology, human resources, and accounting departments.

The Washington Post reports this morning that "Stop & Shop's top executives will immediately replace their counterparts at Giant, creating one management team, the company said. Giant chief executive Richard A. Baird will step down in July. He will be replaced by Stop & Shop chief executive Marc Smith, who will head both grocery chains."

Giant has long built its reputation on strong customer service and community ties, but has found its operations stressed by increased competition from discounters. The company raised eyebrows late last year when, during the holiday season, it reduced employee hours in the stores as a way of cutting costs.
KC's View:
You could see this coming months ago when Ahold's new CEO, Anders Moberg, said that virtually every one of the company's operations would be examined for greater efficiencies and that centralization would be the company's priority.

We questioned that move then, and we question it now. Certainly you can argue that some form of centralization and efficiency is important, but what we don't know - but will soon learn - is whether its various US divisions' unique approaches to the business and their communities is a critical foundation in their success. If that is so - and we suspect this could be true - then the search for efficiency could end up undermining, not bolstering, their operations.

At the end of the day, when you realize that many of these moves can be traced to people who cut corners and took a less than ethical approach to the company's accounting procedures, you begin to wonder how those people can be held accountable. For example, when the decisions are made about the termination package given to deposed Ahold CEO Cees van der Hoeven - under whose watch all of this transpired - we certainly hope these new circumstances are taken into consideration.