In Europe, Ahold has operations that span across several countries, including the Czech Republic, Slovakia, Portugal, Sweden, Norway, the Baltics, and the Netherlands, where Ahold is the market leader.
In the United States, Ahold is one of the largest and most successful food retailers in the eastern United States. The company operates three American grocery chains that generated $5.61 billion in sales during FY 2010. It also owns Peapod, the largest online grocery delivery service in the country. Stop & Shop and Giant-Landover are Ahold’s two leading U.S. banners with 571 stores spread throughout the Northeast and Mid-Atlantic regions.
Seventy thousand Ahold employees, approximately 65 percent of the Ahold U.S. workforce, benefit from a productive labor-management partnership with the United Food and Commercial Workers (UFCW) Union. For more than a decade, Ahold’s unionized operations have served as the foundation for the company’s success in the U.S. In FY 2009, the two grocery chains netted a total of $18 billion in sales and $869 million in operating income—accounting for an estimated 46 percent of total company earnings.
The company’s third and smallest banner within Ahold USA, Giant-Carlisle, operates 177 stores in Maryland, Pennsylvania, West Virginia, and Virginia. Ahold’s workforce at Giant-Carlisle is almost entirely non-union. In Richmond, Virginia, where Ahold operates a non-union chain, Martin’s, management refuses to afford the predominantly African American workforce the basic freedom to join a union and, in fact, workers face anti-union aggressive efforts aimed at preventing them from having a voice on the job.
Ahold’s decision to deny a considerable portion of its U.S. workers the basic freedom to choose a union has damaging ramifications for the livelihoods of these workers given that collective agreements are the only way for workers in the United States to secure fundamental rights on the job.
Furthermore, the company’s staunch anti-union behavior has serious business implications. Ahold’s documented success is at risk because of what we believe to be troubling management decisions. Even though historically, Ahold’s unionized operations have posted higher operating margins than its non-union operations and the entire Ahold group, Ahold management has apparently indicated that its primary focus for expansion is its non-union banner.
Ahold is at the crossroads. We believe the decision to grow non-union as opposed to union comes with a set of risks for the company that could impact its valuation. Choosing confrontation over cooperation means abandoning a proven partnership that has contributed to customer loyalty, brand reputation, operational performance, and the bottom line. In our view, workers in Ahold’s non-union stores should enjoy the same rights to freedom of association as those enjoyed by unionized workers in the company’s other operations. Further, we believe that the history of the UFCW-Ahold partnership demonstrates that implementing consistent labor relations policies that hew to international labor standards, just as Ahold has done at Stop & Shop, Giant -Landover, and in the Netherlands, is not only the right thing to do, it is the profitable thing to do.
*These numbers are subject to change, as the companies open and close stores