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The Washington Post reports this morning that Ahold's Giant Food of Landover, Md., has told store managers to cut back on employee hours by four percent per week for each of the next three weeks. In addition, the company reportedly is changing prices on some two thousand SKUs - though as of this writing, the company is not saying whether these changes are increases or cuts. Employees, however, are saying that the company is raising prices.

The combined effort, according to the Post, is described as way of boosting company profits before the end of the year and to help its scandal-plagued parent company, Royal Ahold, to meet quarterly earnings projections.

Barry Scher, vice president of public affairs for Ahold USA, declined to comment on specifics of what he called "routine adjustments," which he described to the Post as "proprietary information."

Store managers and employees interviewed by the Post disagreed with that characterization, saying that it hardly was routine to cut employee hours at the busiest time of the year. In addition, they questioned the wisdom of raising prices, and attributed the move to a more hands-on approach being taken by Royal Ahold, a company that used to pride itself on a hands-off management style.

Ahold already has announced that some of Giant's administrative functions are being combined with Stop & Shop's, which has raised the specter of lost back office jobs. Ahold CEO Anders Moberg has also gone on record saying that company would pursue a more centralized approach to operating, saying that the decentralization of the past led to close to $2 billion in overstated revenue over a period of several years.
KC's View:
The opposite argument is that it isn’t decentralization that created the fraud, but rather a cultural flaw that put pressure on divisions to make numbers that may have been unreasonable. This argument would suggest that when numbers guys are in charge - as opposed to merchants - these kinds of occurrences are almost inevitable.

While we note that Giant is commenting on the nature of the "routine" price adjustments, management also isn't denying the fact that they are price increases. If they were price cuts, they'd be trumpeting that fact.

The ultimate question is whether customers are going to notice these changes. If they do, it probably won't be for the better.