Giant Food Inc.

Giant Food Inc.

6300 Sheriff Road
Landover, Maryland 20785
U.S.A.
(301) 341–4100

Public Company
Incorporated: 1935 as Giant Food Shopping Center Inc.
Employees: 26,000
Sales: $2.9 billion
Stock Index: American Pacific Philadelphia

From its Depression-era beginnings as Giant Food Shopping Center Inc., Giant Food has become a large, vertically integrated regional supermarket and pharmacy chain. Directly and through its 14 subsidiaries, Giant operates 148 retail food and drug stores in the Washington, D.C. and Baltimore, Maryland metropolitan areas. Its stores are large (average size is 55,000 square feet), and focus on providing its customers with quality, value, and service. Giant dominates its market area with 47% of the Washington market and 25% of the Baltimore market. Over the years it has been innovative in its approach to selling in the food industry and willing to take risks in developing a high-quality supermarket chain in a diverse urban market. To achieve its position as one of the largest food retailers in the United States, Giant has been aggressive in its marketing strategies and successful at spotting coming trends and implementing changes that keep it ahead of its competition.

Starting a new business during the Depression was a risk for Giant’s founder, Nehemiah Myer (N. M.) Cohen, but he had been watching the progress of the “supermarkets” that had begun to open in the early 1930s and felt that they were the business of the future. Cohen, a rabbi, had immigrated from Palestine after World War I and settled in Carnegie, Pennsylvania, where he soon opened a kosher meat market. He later moved to Lancaster, Pennsylvania and eventually opened three butcher shops there. To open his first supermarket Cohen sought the help of food distributor Samuel Lehrman, who provided the financial backing. Lehrman’s son Jacob was also a partner in the venture. They chose Washington, D.C. as their location, figuring that government employment would keep the economy there stable. Giant Food Shopping Center opened its doors in early 1936 as Washington’s first mass-merchandised supermarket. Amid the unemployment and breadlines that followed the 1929 stock market crash, Giant Food made its impact on the community by introducing both self-service and one-stop shopping to the consumer. Coupled with its lower prices, these features kept the store busy and crowded from its opening days.

By 1939 Giant had expanded to three stores. Giant’s fourth store had a brick-and-glass facade that spelled out its name and was lighted at night, an innovation at the time. Just as the United States entered World War II, Giant opened its sixth store, in Arlington, Virginia, the first outside of the District of Columbia.

The war had a detrimental effect on the supermarket industry as personnel shortages, product shortages, and rationing became prevalent. Giant, like many other businesses, began employing women to counter the manpower shortage, and female checkers soon became a permanent part of the American grocery store.

Giant stopped expanding during the war, but in 1945 it opened two new stores in Washington and one in Virginia. In the late 1940s, Giant began to move toward vertical integration, leasing a slaughterhouse to ship meat to all its stores. In 1948 Giant bought the Sheridan Bakery, which had been supplying baked goods to the chain. Renamed for Jacob Lehrman’s daughter, Heidi Bakery has continuously provided bread and baked goods for all Giant stores both from the original bakery location in Silver Spring, Maryland and from the in-store bakeries developed in later years. (In 1965 the bakery baked a 700-pound cake for President Lyndon Johnson’s Inaugural Ball.) In 1952 Giant opened the Giant Retail Bakery in downtown Washington to sell only bakery goods, but this venture was not successful and was closed within a few years. By 1949 Giant had 19 stores, including three in Maryland and three in Virginia.

Between 1950 and 1952, Giant added five new stores, joining in the general expansion of the American economy. At this time, the shopping center concept was taking hold in America and Giant put a new store in the Congressional Plaza Shopping Center in Rockville, Maryland. In 1955 Giant Construction Company was incorporated to build Giant stores. Giant Food Properties, an independent company which eventually came under the control of Giant and is now known as GFS Realty Inc., was established to handle the sale and lease of real estate for the company.

In 1955 the chain opened its first store in Baltimore and in 1956, its first in the Richmond, Virginia market. By this time 48% of all its stores were located in shopping centers. In 1958, riding a new merchandising trend of combination supermarket/department/discount stores, Giant opened its first Super Giant store and within a year had opened eight more. Also in 1958 the company opened its new headquarters and distribution center on a 40-acre site in Landover, Maryland. At the same time, an addition to the Heidi Bakery doubled its production capacity.

In 1957, Giant Food Shopping Center Inc. became Giant Food Inc., and fiscal 1958 saw sales of more than $100 million dollars. In 1959 the company, with 53 stores (including nine Super Giants) went public.

During this time Giant computerized its inventory data, customer information, and payroll and bookkeeping operations. Customer service features added in the 1950s included self-opening doors, mechanized checkouts, and open display cases to make meats and frozen food directly accessible to the customer.

In the 1950s, Giant initiated a scholarship program to encourage students to pursue food management careers. Two of the first five recipients are now senior vice presidents at Giant. This scholarship program is only one of the ways in which Giant has contributed to the community over the years. In the aftermath of the racial unrest of the 1960s, Giant took a leading role in providing food for those made homeless by riots. Giant’s then-president Joseph B. Danzansky also directed a food drive, in which local and national businesses supplied food for demonstrators camped in “Resurrection City” in Washington during a two-week protest to call attention to the poor in America.

In 1961 Giant’s stock began trading on the American Stock Exchange as well as the Washington branch of the Philadelphia-Baltimore Stock Exchange. In its stores, Giant began developing its private-label products and offering plastic housewares and specialty food items in response to customer demands. Giant built its first combination food store and pharmacy in 1962.

Although the company has been criticized for bypassing predominantly black neighborhoods, by the mid-1960s Giant did begin to open stores in the inner city. In the rioting that followed the assassination of Martin Luther King Jr. in 1968, store managers and black employees faced down angry mobs at Giant stores, and the chain escaped much of the looting and damage of the period.

Giant’s management implemented three policies during this time which were designed to decrease employee turnover. It began recognizing talented young workers (age 25 and under) and giving them increased management responsibility—the company dedicated itself to promoting from within—and an employee tuition-assistance program was started.

In 1964, founder N. M. Cohen stepped down as president and became chairman of the board, a newly created position. Joseph Danzansky, longtime legal counsel, became president. This election touched off a legal battle for control of Giant between the Cohen family and Jacob Lehrman. The Cohens gained operating control of the company, but Lehrman remained on the board of directors. In 1977, N. M. Cohen was made honorary chairman of the board, Danzansky became chairman, and N. M.’s son Israel became president and CEO. Izzy, as he is known, had been in the business since he was a delivery boy in his father’s butcher shops before the days of Giant Food. He continued his father’s informal and friendly, but strict, management style.

The 1970s were the “decade of the consumer”; Giant responded to this movement by hiring its own consumer advocate, Esther Peterson, formerly a consumer adviser to the Kennedy and Johnson administrations. The company began a program of providing information to consumers about the food they were buying, and also worked with the Food and Drug Administration to develop and test nutrition labeling. Educational and informational brochures were distributed for free, and unit pricing and open dating were implemented. In 1972 Giant opened its Quality Assurance Laboratory to monitor the quality and safety of the food it sold, and in 1974 the company implemented a toy-safety program by pledging to sell only those toys certified safe by the manufacturer.

In another move toward vertical integration, Giant built a warehouse and grocery-distribution center in Jessup, Maryland. The Jessup center opened in 1973 and was a model of automated operations. Danzansky described it in 1974 to Nation’s Business as “a Buck Rogers kind of thing. Push a button and the stuff almost jumps on the truck.”

In the early 1970s Giant sold its four freestanding Super Giant stores to Woolco and rededicated itself to food retailing. In the inflationary period of the middle 1970s, Giant began discounting its prices, gambling that increased volume would counterbalance lower prices. In fiscal 1979 the company had its first billion-dollar year.

In 1975, Giant began using computer-assisted checkout and in 1979 it installed price-scanning equipment in all of its stores. While Giant was making supermarket history by implementing scanners, consumer activists and legislators in Washington accused the company of using the scanning system to trick unwary customers into paying higher prices since prices were posted only on shelves, not each item. Giant weathered the storm of protests and proved with its data that the system reduced operating costs.

Giant Food in the 1980s continued both expansion and vertical integration to hold and build its place in its market. In 1982 it opened Someplace Special in McLean, Virginia, a gourmet food store that sells specialty items and offers services such as menu planning, flower arranging, delivery service, and catering for its affluent customers. While not its most profitable store, Giant has used Someplace Special to test consumer demand for gourmet food and other specialty items. The chain also experimented with warehouse-type stores, opening three under the name Save Right; these now operate under the Giant name. In 1982, Giant closed its Richmond, Virginia stores after 25 years of operating in that city. By mid-1980s about half of Giant’s stores were food and pharmacy combinations. In the 1970s Giant had created Pants Corral stores in its Super Giants as part of a deal to sell Levi’s jeans. The Pants Corral division, which also included 30 free-standing stores, was sold in 1985.

Expansion at Giant in the 1980s included increasing store size; in 1983 it opened a 60,000-square-foot store in a former Super Giant. This flagship store stocked some 40,000 items and combined such features as gourmet food, cosmetics, in-store bakery, salad bar, and bulk food items. Vertical integration continued with the opening of an ice cream plant and a soda-bottling plant in 1985. Giant has also focused on remodeling and redesigning existing stores in the late 1980s.

Consumer-oriented programs have continued to be a part of Giant’s service. Giant initiated a point-of-purchase “special diet alert” shelf label to increase customer awareness of low-fat, low-calorie, and low-sodium foods. Sales of these items were monitored for two years and data supplied to the United States Food and Drug Administration for use in measuring the effectiveness of such shelf-labeling programs. Giant also participated in an “Eat for Health” campaign with the National Cancer Institute. Bulk food bins, which allow customers to buy the amount they want, and increased availability of specialty food items are offered in response to consumer input, and Giant operates a corporate customer service center to handle questions, concerns, and compliments from both customers and employees.

Giant is located in a market area that is highly transient. The company feels that it must give customers exceptional service to draw them to Giant instead of the familiar national chains. Giant’s approach to its “associates,” as employees are called, is an important part of achieving this high level of service. Good salaries, employee benefit programs, and intensive training have always been a part of the company’s employment philosophy. Associates, many of whom are the second and third generation of their family to work with the company, are motivated through career-development programs, awards, and a company news magazine, started in the 1950s and produced on video in the 1980s.

Giant attributes its success to the principles on which it was founded, the personal philosophy of founder, N.M. Cohen. Cohen not only closely monitored his business to spot trends, but was the force behind the company’s continuous emphasis on quality, value and service. Active in the company until he was 90, the elder Cohen died in 1984 at age 93.

Of the future, President Izzy Cohen said, “we’ve found our best mousetrap—the food/pharmacy combination, married to the gourmet features. We think that’s the store of the 90s.”

Principal Subsidiaries

Giant of D.C., Inc.; Giant of Maryland, Inc.; Giant of Virginia, Inc.; Giant of Salisbury, Inc.; Warex-Jessup, Inc.; Giant Construction Co., Inc.; GFS Realty, Inc.; Landover Wholesale Tobacco Corp.; Bursil, Inc.; LECO, Inc.