When Ahold Delhaize kicked off the multi-year remodeling plan for Stop & Shop in 2018, the Dutch grocery operator said it aimed to give the banner’s more than 400 stores “a fresh new look.” Since then, the renovations have played a key role in Ahold Delhaize’s efforts to boost the long-struggling chain.
Over the past six years, Ahold Delhaize executives have touted the remodels as a success, and Ahold Delhaize USA CEO JJ Fleeman noted during a company event in May that remodeled Stop & Shop stores are outperforming ones that haven’t received updates. Yet Stop & Shop has remodeled only about half of its stores since the program began, and the chain continues to face financial woes.
Stop & Shop is also looking to store closures as a way to help strengthen the banner, with Fleeman saying at the May event that the chain will shutter an unspecified number of locations. Alongside the store closures, Stop & Shop is proceeding with updating its stores, although the pace of yearly completed remodels has slowed.
Stop & Shop’s remodeling pace has slowed over the last two years
Number of completed remodels and total stores for the chain
A Stop & Shop spokesperson said in an email that the company is continuing to move forward with renovating its locations as it looks “to deliver a great in-store experience for local customers.”
The spokesperson said Stop & Shop plans to remodel “several additional stores” by the end of the year and to continue renovations next year, but did not respond to a question about why the annual pace of remodels has declined after peaking at 55 in 2021.
The chain noted in the email that it opened a new flagship store last week in Boston, which features a bigger selection of grab-and-go meals and more than 800 new multicultural products to better cater to customers, such as the area’s growing population of young professionals. The newly opened Boston store signals that broader multicultural assortments are playing a bigger role in how Stop & Shop is looking to better appeal to shoppers.
A promising start
Stop & Shop’s remodeling effort started with updates to 21 stores in the Hartford, Connecticut, area in 2018. The company said at the time that these sites would serve as a test for in-store experiences like taqueria stations and frictionless checkout technology “which will be used to inform updates across the brand’s 400-plus stores over the next several years.” Ahold Delhaize did not specify a timeline for when it would complete the remodeling effort.
The remodeling program showed early signs of success, with the Hartford-area stores generating a “positive sales uplift” in 2018, Ahold Delhaize CEO and President Frans Muller said during an earnings call in February 2019.
Then-CFO Jeff Carr added during that call that the company planned to invest an incremental 100 million to 150 million euros ($107 million to $161 million at current exchange rates) per year in the program and expected the investment to reach 1.6 billion to 2 billion euros over the following four years.
In the years since, Muller has highlighted the remodels to investors as a bright spot for Stop & Shop. Updated stores in Hartford and on Long Island, New York, were performing “in line with expectations” one year after the initiative’s launch, Muller told investors in early 2020.
While Stop & Shop fell five stores short of its goal of remodeling 60 stores in 2021, Muller said on an earnings call in February 2022 that Ahold Delhaize was “quite content” with its progress. Then-CFO Natalie Knight noted on that call that remodeled Stop & Shop stores “continue to exceed our sales expectation.”
In early 2022, Ahold Delhaize announced a multi-year $140 million investment over two years to remodel Stop & Shop stores in the New York City market, which was aimed, in part, at adding thousands of new items to reflect the diversity of the neighborhoods those stores serve. The investment came at a time when Stop & Shop also zeroed in on reviewing its assortments in multicultural areas, such as the Bronx, New York.
Ahold Delhaize has indicated that its focus on the Big Apple — a key market for the chain — is playing a major role in reviving Stop & Shop.
The Stop & Shop spokesperson said that the company is looking to deliver a more culturally relevant assortment across all Stop & Shop stores.
For 2022, Ahold Delhaize lowered its remodeling target to 40 locations — and cleared the goal with a total of 45 completed. The momentum didn’t last, however, with Stop & Shop only completing 19 store remodels in 2023.
Struggles abound
Stop & Shop’s remodeling program has coincided with a turbulent few years for the chain. An 11-day strike at Stop & Shop during Easter in 2019 resulted in a $224 million net sales loss and led to an additional sales loss after it ended. That same year, Stop & Shop announced a merger with King Kullen that it subsequently called off in 2020.
“Stop & Shop is operating in a challenging sales environment,” Muller said during the company’s earnings call for its third quarter of fiscal 2019.
The unsettled conditions continued.
“COVID-19-related disruptions” slowed the pace of store remodels at Stop & Shop, Ahold Delhaize noted in its 2020 annual report. During that year, Stop & Shop only updated 33 stores, missing its goal of 48 remodels, but Ahold Delhaize noted that the company would accelerate its remodeling efforts in 2021, with a goal of updating 60 locations.
Late last year, Ahold Delhaize announced plans to sell FreshDirect, an online grocery service which had served as a in the New York City area, to rapid delivery firm Getir.
Stop & Shop’s underperforming stores were top contributors to Ahold Delhaize’s impairment charges in 2019, 2020 and 2021, the parent company disclosed in its annual reports for those years.
Muller made clear during Ahold Delhaize’s latest earnings call in May that Stop & Shop remains a top issue for the company.
“We are not content yet with our performance of Stop & Shop. We did a lot of things there, and the team did a good job in remodeling more than half of our stores already, so that is going in the right direction, and those stores are performing well,” Muller said. “But there’s more to do” on the banner.
Sam Silverstein contributed reporting
