History
editThe chain was founded in 1935 by N.M. Cohen and Samuel Lehrman in Washington, D.C. Cohen had owned several kosher butcher shops in Lancaster, Pennsylvania, and Lehrman had operated a local cannery, the Harrisburg Grocery Company, nearby. Cohen decided that Washington D.C. was an ideal location for a supermarket, which was then a new phenomenon. He proposed a partnership to Lehrman, under which Lehrman would put up starting capital of $5,000 and Cohen would provide day-to-day management. The first Giant Food Shopping Center opened on February 5, 1936 in an old warehouse on Georgia Avenue offering the lowest food prices in town. The food retailing pattern of the area was shattered forever. Within a year the food price level of the Washington metropolitan area had been reduced by 35% and the supermarket was in Washington to stay.
Cohen was attracted to Washington, D.C. because under the New Deal, federal government employment was growing rapidly, providing a ready market. However from the beginning the company faced formidable competition from national food chains that were also attracted to the lucrative marketplace. Cohen decided that Giant Food's competitive advantage would be to tailor itself to the special needs of the prosperous, educated and sophisticated consumers who made up the Washington marketplace. National chains, on the other hand, were focused on the more downscale needs of an economically depressed America.
By the time the United States entered World War II, Giant Food had expanded to four supermarkets. With the establishment of government rationing under the Office of Price Administration (OPA), Cohen and Lehrman retained a young lawyer, Joseph B. Danzansky who had expertise in working through the complexities of the OPA. This decision was to have fateful consequences two decades later.
During the ensuing years Giant's successful business model resulted in rapid expansion throughout the Washington metropolitan area while the partners grew increasingly farther apart. Cohen's philosophy was consumer-centered and Lehrman was fixated on the bottom line. Board meetings increasingly ended in deadlock. To resolve this problem, Cohen and Lehrman agreed that they needed an impartial third voice on the board, and since they both respected Danzansky, he was given one share of stock and empowered to break any deadlock on the board.
Danzansky was a skilled negotiator and diplomat with a winning personality, and his presence on the board of directors resolved the differences between the two principals for many years. After several years Sam Lehrman died and his shares and seat on the board were inherited by his son, Jac Lehrman. More than ever the company was dominated by the forceful personality and clarity of vision of its president, N. M. Cohen and increasingly by his talented son Israel (Izzy) Cohen who became vice president of operations. The strong personalities of the elder Cohen and his son often brought them into conflict, so Danzansky's role was expanded to find common ground not only between the Cohens and the Lehrmans, but between N. M. Cohen and his ambitious son as well.
None of this appeared to affect the expansion of the company, which continued apace in Maryland, Virginia and Delaware. Giant was increasingly viewed as an industry innovator and hosted an unending troop of American and foreign dignitaries anxious to learn its cutting-edge retailing model. In 1958, Giant launched its first Super Giant Department Store in Annandale, Virginia, a 55,000-square-foot (5,100 m2) store that it dubbed "A New Dimension in Retailing." Anticipating the current "big box store" phenomenon by fifty years, the Super Giants that were opened in subsequent years were combined supermarkets and mini-department stores. However, they did not practice the economy of scale that makes current big-box stores successful. The pinnacle of the concept was reached when the company opened a Super Giant in Lanham, MD which included such amenities as a carpet store, dry cleaning, a pharmacy and fur coats. This concept was championed by Izzy Cohen, but the stores proved to be decades ahead of their time and caused a financial crisis. This exacerbated the differences between Izzy Cohen, his father, and Jac Lehrman, and placed him in eclipse for some time.
In 1964 N. M. Cohen became seriously ill and believed his life was drawing to a close (he was 74 years old at the time but was to live for another twenty years until killed in an automobile accident). Concerned about the future of the company he loved if he were to die, he called Danzansky to his hospital bed and asked him to succeed him as president. He said he would vote the Cohen shares for him and asked Danzansky to vote his single share for himself. When Danzansky objected Cohen said he lacked faith in either Israel Cohen or Lehrman and feared for the company's future if Danzansky refused to agree. Danzansky reluctantly complied, touching off a long-running suit by the Lehrman interests that Danzansky ultimately won. Following the loss of his suit, Lehrman retained his position on the board and his title as executive vice president but was stripped of all operational authority. Israel Cohen continued as vice president in charge of operations.
The Danzansky era ushered in a period in which Giant earned a national reputation as the most innovative and public-spirited company in the food industry. By 1977, when Israel Cohen finally succeeded in replacing Danzansky as president, Giant had become the dominant factor in the Washington/Maryland/Virginia area, with three billion dollars in sales, 145 stores and 13,000 employees. Although Washington was once the location of many of the nation's largest food chains, including Grand Union, Kroger, Food Fair, Acme Markets and others, Giant gradually out-competed them and forced them to shutter their stores and leave. The only remaining major players were A&P/SuperFresh and Safeway.
During Danzansky's tenure market share continued to increase every year while earnings consistently exceeded the then-industry average of one per cent of sales. This brought the company under the frequent scrutiny of the Federal Trade Commission and other legislative and regulatory bodies which accused the company of unfair trade practices. However since Giant's expansion was entirely accomplished without merging with or acquiring any other companies, the company weathered these challenges unscathed.
There were several reasons for Giant's market domination during Danzansky's 13-year tenure as president. First and most important were the principles laid down by founder N.M. Cohen. Companies often have paper principles but Cohen enforced them. The first principle was uncompromising quality. In the upscale Washington metropolitan area, this was a competitive advantage Giant's competitors were slow to emulate until the advent of Whole Foods Market and Wegmans many years later. The second principle was value. Cohen believed that shoppers wouldn't mind paying a bit more if they got their money's worth in consistent quality. The third principle was service. Cohen was rarely in his office. He tirelessly spent his days dropping in unannounced at his store and making sure that every customer was treated as a welcome friend. He would be known to bawl out an employee for refusing to give a customer a refund for a spoiled competitor's product. But perhaps most telling was his continuing admonition to the company's staff to give something back to the community that provided their living. In admonishing staff members to give generously to the United Way, for example, he would say, "This is a free country. You don't have to give. But you are also free to work somewhere else!"
Danzansky was to build upon this corporate culture of public-spiritedness and fashion it into an effective marketing strategy, which he liked to call "enlightened selfishness." To help him design this strategy he appointed the company's public relations director, Paul S. Forbes as his right hand and alter ego with the title of executive assistant to the president. At that time most people regarded public relations and "free publicity" as synonymous. Forbes disagreed. He told Danzansky that the best way to gain a favorable public reputation was to deserve it. Danzansky concurred. It was a logical extension of Cohen's philosophy.
Forbes proposed that Giant seize the local leadership of two of the great national controversies that were then gripping the nation: civil rights and consumer rights. At that time the food industry was strongly resisting the efforts of consumer advocates to mandate such consumer-friendly programs as open dating, unit pricing and "truth in packaging" labeling. This crusade was led by Esther Peterson, former aide to Eleanor Roosevelt and at that time President Lyndon B. Johnson's assistant for consumer affairs. Forbes sought her out and offered to welcome her and support her causes. She accepted and her first visit to Giant was a major media event. Thereafter she called Forbes whenever she needed advice about the business community.
It was to pay off when President Johnson left office and Peterson returned to her old lobbying job at the AFL-CIO. With Danzansky's concurrence, Forbes asked her to lunch and offered her the job of consumer advisor to Giant Food. After many months of negotiation, Giant agreed to give her a free hand to implement whatever consumer programs she chose and to take out full-page ads at the company's expense criticizing it if it did not live up to its promises to her. It was an unprecedented stroke that left both the consumer movement and the business community gasping. Consumer advocates accused Peterson of selling out, while food executives, including those at Giant, complained that Peterson would "keep them for selling out of anything."
There had been other consumer advisors on the payrolls of other companies. What made Esther Peterson's role different was that she was to have a seat at the decision-making table as the consumer's representative to the company instead of the company's representative to the consumer. This was to be no mere public relations stunt.
The business community was not happy. The Advertising Federation, voicing a common business view, called her "the most pernicious threat to advertising today." Supermarket News accused her of trying to destroy the free enterprise system. The food industry ostracized Danzansky but he supported Forbes' initiative and agreed to work closely with Peterson. To enlist the support of the company's vice presidents for Peterson's ideas, he created a Consumer Action Task Force and appointed Forbes to chair it.
Giant's reputation and market dominance were cemented when President Richard Nixon imposed price controls as part of his anti-inflation program. A major flaw in the program was that while retail food prices were frozen, farm and wholesale prices were not. This created an anomaly in which food retailers were forced to pay more for beef than they were allowed to sell it for in their stores. As a consequence many food retailers simply removed beef from their shelves. Giant decided to buy its own beef on the hoof and have it custom-slaughtered. This narrowed but did not eliminate the cost/price gap. It loaded up Giant's warehouse with expensive beef but Giant was the only store in its market to make beef available to its customers (albeit at a loss).
In the midst of this crisis Esther Peterson exercised her prerogative and ran full-page ads advising consumers that beef was too expensive and to buy something else such as chicken. Giant's meat buyer was furious with her but the Washington Post ran stories and editorials commending Giant's public-spirited behavior and marveling that a company would take out ads advising customers not to buy its products.
Giant's reputation for consumer sensitivity soared to such an extent that competitors' stores saw a marked drop-off in sales. Gradually Giant's competitors left the market and Giant was positioned with the largest regional market share of any supermarket chain.
As for civil rights, Forbes, Giant's public relations director, had been walking the streets of Washington's inner city for many months during the early 1960s. He was troubled by what he heard. The conventional wisdom back then was that Negroes (the then-current term) were better off in Washington than in the South from which many had migrated. There was less overt discrimination, they had the right to vote, there were many lucraative jobs with the federal government, and they held key political offices, including that of Mayor. Furthermore it was believed that President Johnson would put troops on the street to quell any civil unrest that might threaten the federal government. But Forbes picked up rumblings of discontent among the minority community that disturbed him.
Forbes persuaded Giant's management to develop what was then a pioneering outreach to the Negro community. He established community advisory groups to advise the company on community needs and grievances. For the first time Negroes were placed in store management positions and placed in meatcutter apprenticeship programs (which led to well-paying meatcutter jobs). The company opened its model store in the midst of a low-income neighborhood and hired minority youth to tend the landscaping, which was installed in cooperation with First Lady Lady Bird Johnson. Inner city stores started carrying foods recommended by the advisory groups. A nutrition counselor was engaged to help residents plan more healthful diets. And a partnership was developed with Pride, Inc., headed by later-to-be Mayor Marion Barry, to give jobs to young ex-convicts. Partnerships were forged with local churches and programs were established to help young children and take them to ball games.
All this paid off in a big way for Giant after Martin Luther King, Jr. was assassinated and riots swept Washington, D. C. While Safeways were burned and/or looted, customers and Pride, Inc. youths joined hands around the Giant stores for three days and three night and chased the rioters away. All Giant's stores came through the riots intact. At the same time, Danzansky was chosen by Mayor Walter Washington to head up relief efforts for the riot victims, which made him a celebrity and launched his career as the area's premier community leader for the rest of his life.
In 1976 Esther Peterson returned to the White House as President Jimmy Carter's special assistant for consumer affairs. Danzansky and Forbes left Giant in 1977. Danzansky was succeeded as CEO by Izzy Cohen. Peterson was succeeded by her assistant, Odonna Matthews.
In the 1970s, Giant experimented with department stores under the Super Giant name and apparel stores, including Pants Corral.
Since 1977, Odonna Mathews has been well-known to Washington- and Baltimore-area Giant Food shoppers as consumer adviser. Mathews, who appeared in countless circulars and TV and newspaper ads, announced her retirement in September 2005, effective at the end of the month. Andrea Astrachan succeeds Mathews in the role, and she also appears in Stop & Shop circulars and in-store ads.
Giant was now known in Virginia, Maryland, and soon in the Delaware Valley in Delaware, Pennsylvania and New Jersey. Giant Food Inc. was the first supermarket chain to use computer-assisted checkout systemwide. In 1994, shortly before the Lehrman Family sold all Giant Food stock and director's seats to J Sainsbury plc, Giant began northern expansion by opening stores in Pennsylvania, Delaware and New Jersey under the Super G trade name. This was done to differentiate itself from future sister company Giant Food of Carlisle, Pennsylvania.
Upon Izzy Cohen's death in 1995, the Cohen family interest were inherited by the 1227 Corporation (a numerical representation of "IZZY" when scribbled), setup by the late Cohen's estate. In 1998, Giant Food Inc. was purchased by Royal Ahold based in the Netherlands from the 1227 Corporation and J Sainsbury plc. Most of Giant's headquarters staff was dismissed and the company became, in effect, a part of Stop & Shop, an Ahold subsidiary. To all intents and purposes, the Giant Food of old ceased to exist; 2004 marked the year for sister company Stop & Shop to merge operations with Giant Food.
During 2005, the newly formed Stop & Shop/Giant made the decision to phase out the Super G name in New Jersey and Delaware. In New Jersey, four Super G stores were shuttered and the remaining eight stores were converted to the Super Stop & Shop banner and became a part of Stop & Shop's Metro New York division in an attempt to revive sales at the stores. (The stores continued to underperform and were subsequently sold in 2007 to ShopRite Supermarkets.) The Delaware Super G stores were to be remodeled and reopened as Super Giant. These Super Giants are modeled after Stop & Shop's own super stores under the "Super Stop & Shop" name.
Giant is a long-time sponsor of the Washington- and Baltimore-area high-school quizbowl game It's Academic. In the 1950s and early 1960s, Giant was also the sponsor of a local children's TV show hosted by cowboy singing star Pick Temple.