Deal will bring Starbucks to some Giant stores

Friday, Feb. 24, 2006

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Giant Food of Landover has signed a five-year deal to operate Starbucks Coffee shops in some of its supermarkets.

Trying to curb lagging sales and hold on to its spot as the top grocer in the region, Giant Food LLC in Landover — a major Prince George’s County employer — has signed a five-year agreement with Starbucks Coffee to open ‘‘several” licensed stores inside Giant supermarkets, the company announced Tuesday.

The Seattle-based chain will open the first stores this spring, according to company information.

Details are still sketchy.

Giant officials did not disclose specific locations for the new Starbucks stores, but said they would open in both existing and planned Giant locations. The Starbucks licensed stores will be operated and staffed by Giant associates, officials said.

Giant already operates one Starbucks-licensed store in Severna Park.

When contacted, Giant spokesman Barry F. Scher said he could not provide the cost of the agreement.

In a statement, Bill Holmes, Giant’s executive vice president and general manager, said the company is ‘‘excited” about the new partnership.

‘‘It’s another example of the one-stop shopping we offer, where customers can find a variety of goods and services under one roof,” Holmes said.

Giant isn’t the first grocer in the region to team up with Starbucks.

Safeway Inc., whose Eastern division is headquartered in Lanham, began partnering with Starbucks seven years ago, said Gregory Teneyck, a Safeway spokesman. There are Starbucks-licensed stores in 80 Safeway locations in the Eastern region.

The Starbucks venture is Giant’s latest effort to bolster sales.

Earlier this month, Giant announced a deal with Redbox of Oak Brook, Ill. — a subsidiary of fast-food giant McDonald’s — to offer automated DVD rental kiosks in its stores. Starting in March and finishing in June, the rental kiosks, with more than 500 DVDs each, will be installed in about 80 percent of Giant’s 187 supermarkets in the region, according to company information.

The agreement follows a 12-month test in Giant’s Baltimore locations.

Giant posted sales of $5.94 billion in sales in 2004, according to Hoover’s, an online business information service. In the third quarter of 2005, identical store sales for Giant slumped 2.3 percent from the previous year.

Last May, Giant announced it was getting out of the manufacturing business.

After much speculation, Giant — owned by Royal Ahold of the Netherlands — sold its 1.6 million-square-foot Landover campus to affiliates of privately held Preferred Real Estate Investments of Pennsylvania. The company plans to rename the property and build an office park on the 104-acre site.

Giant expects to conclude negotiations on a new 50,000-square-foot administrative building soon, but is still uncertain if it will be in Prince George’s. About 250 administrative workers would relocate in the move, Scher said.

While Giant remains the No. 1 supermarket chain in the Baltimore and Washington, D.C., markets, its market share has gradually declined the past few years, as other chains, including CVS and Wal-Mart, continue to climb.

Giant and Stop & Shop Supermarket Co. of Quincy, Mass., also owned by Royal Ahold, have been jointly managed since 2004. Also in 2004, almost 650 administrative jobs were moved from the Landover headquarters to locations outside of the area as part of the consolidation with Stop & Shop.

Stop & Shop has more than 58,000 employees and operates 376 supermarkets in Massachusetts, Rhode Island, Connecticut, New Hampshire, New York and New Jersey, according to company information.

Starbucks Corp., meanwhile, continues to dominate the retail coffee industry. The company reported $1.934 billion in net revenue for the quarter that ended Jan. 1, up from $1.589 billion in the prior-year quarter, according to filings with the U.S. Securities and Exchange Commission. Net earnings for the quarter were $175 million, up from $145 million the previous year.