The most significant area of focus for our value repositioning strategy is in the Stop & Shop and Giant-Landover banners. Previously announced as the Value Improvement Program (VIP) this program has the most impact on the company’s overall financial results in the near-term.
VIP contains all the elements of repositioning, as described in Ahold's growth strategy, needed to improve identical sales growth at both Stop & Shop and Giant-Landover. These elements are being applied to both businesses in the following manner:
Improving product and service offering: We are enhancing our offering across all categories. In terms of product improvement, we have already simplified our produce offering. This has allowed us to enhance freshness by reducing transit and warehousing time in our supply chain. We will continue to make similar improvements on a category-by-category basis during the coming months. In terms of service improvement, we are also working on modifications to our store layout and check-out areas to simplify the customer shopping experience and place a greater emphasis on convenience.
Improving price positioning: We are rolling out a program to lower prices across a wide range of items. Promotional activity will continue, but will focus on a more targeted group of products. Prices are already being lowered as part of a major repositioning of our produce prices that began in September, and further price reductions will continue throughout 2007. In addition, we are simplifying our pricing architecture to manage this element more effectively.
Reducing costs: We are implementing a comprehensive program to reduce costs across Stop & Shop and Giant-Landover over the next 24 months. This cost reduction program is a component of the company-wide cost-reduction program.