Food Lion is a different company today than the one Rick Anicetti took over as president and CEO five years ago. Back then, the chain focused more on sales, profits and efficiency, and not enough on consumers, according to some observers. The retail philosophy was “one size fits all” in terms of operating stores to serve shoppers. Everything was the same—store size, layout, format, assortments, pricing strategy, and even the circular.
Since then, Anicetti has methodically orchestrated and presided over a dramatic change of direction for Food Lion, a subsidiary of Brussels-based Delhaize Group.
The latest results: Annual U.S. sales in 2007 for Delhaize improved by 5.1% to $18.2 billion, with a 3.8% comp increase called its best in more than 10 years. Sales for the fourth quarter increased 5.1% to $4.6 billion, supported by the performance of Food Lion, among other factors.
But sales and profits are only part of the story behind the new Food Lion. Its recipe for success consists of a blend of “market renewal,” multi-branding, consumer segmentation, and store clustering. The consumer is the centerpiece of the strategy.
This formula has transformed Food Lion into a force to be reckoned with in 11 Southeast and Mid-Atlantic states. Such a dramatic makeover made Salisbury, N.C.-based Food Lion an easy choice for Grocery Headquarters to recognize this chain as its Retailer of the Year.
“We’ve embarked on a very different path,” says Anicetti. “We have really moved away from the sameness that described Food Lion for years.”
Food Lion now operates more than 1,300 supermarkets, either directly or through affiliated entities, under the names of Food Lion, Bloom, Bottom Dollar Food, Harveys and Reid’s. The company employs approximately 73,000 associates.
TRANSFORMING THE BRAND
Anicetti describes the process of “market renewal” as “throwing a marketing ring around stores, renewing them completely, and then reintroducing ourselves to the consumer.” In other words, when a Food Lion store is remodeled, it may re-open as another banner such as Bloom or Bottom Dollar—or it may remain a refurbished Food Lion.
“In 2006, we did our first multi-branded approach,” he recalls. “We took 80 stores in the greater Washington, D.C. area, converted 40 of them to Bloom, 26 to renewed Food Lions, and 14 to Bottom Dollar.”
Over the past five years, this renewal process has also taken place in Baltimore, Savannah, Ga., and Raleigh, Charlotte and Greensboro, N.C. Last year, the focus was on Myrtle Beach, S.C. and Norfolk, Va. This year, it’s Richmond and Charlottesville, Va., and Wilmington, N.C.
Along with this initiative is the company’s focus on eight consumer segments that it has identified and leveraged to group its stores into clusters. The eight segments of distinct consumer behavior that collectively account for shoppers in the markets that Food Lion serves are Savvy Singles, Babies and Bills, Country Living, Comfortable Car-Pooling, Getting By, DINKS (Duel-Income No Kids), Wealthy Elites, and Golden Years.
“It’s all about serving consumers based on their individual needs,” Anicetti explains. “These segments informed our store clustering. We grouped look-alike stores into seven clusters across our 1,300 stores.”
Operating a company based on clusters affects format, design, assortments, fixtures, and promotional opportunities, according to Anicetti. Banners have their own attributes, personality, and strategy—even if they operate in the same trading area. For example, Food Lion is practical and dependable, Bloom is upscale and Bottom Dollar is value.
“That’s what the last five years have been about,” Anicetti explains. “First, it’s been multi-branding. We were an operator of a single brand. Today we’re an operator of five brands and our brands continue to grow. Every year we see the addition of new stores to our brand portfolio. Food Lion is still the engine, of course.”
One facet of this plan to deal with was that every consumer segment is represented in every store in different percentages. “What we discovered is when we start taking a look at the representation of these segments in each store is that certain patterns started to emerge,” Anicetti recalls. “And those patterns we’ve come to call clusters. Any one of our stores can fit into one of seven clusters.”
Over the last year, Food Lion has delved deeply into two of those clusters: the Affluent Bunch, and Golden Country and Family. They account for some 300 stores. Changes were made to assortments, pricing and fixtures.
Preliminary broad-based work is now being done to the five remaining clusters with the expectation of a deep-dive later on. For example, the assortments of every store include cluster-specific core products.
“So if you’re in ‘Golden Country and Family,’ you’re going to find a very different produce core list than you would in Affluent Bunch,” Anicetti says.
In the “Golden Country and Family” cluster, shelf heights were lowered in a number of stores to accommodate older customers.
In Affluent Bunch, the retailer has expanded wine sets and specialty food significantly.
Anicetti is quick to share the credit for the company’s success with the Food Lion Executive Committee. This group of people brings a wealth of retailing experience together for the benefit of all. Some of the members are Food Lion veterans, while others have worked for such retailers as Kroger, Office Depot, and Hannaford. They bring a diverse set of experiences as well as diversity in terms of race and gender.
Anicetti is also proud of the culture that has been created in the company. What was once a very top-down organization is today more nimble.
“It is an organization whose people are beginning to see that they really own the future of this company,” he says. “That’s not to imply that the cashier is going to make a pricing decision or a bagger is going to make a real estate decision. But people clearly can begin to see that they can own what they do in their role every day. We’ve come to call that their ‘fraction of the action.’ And it is the sum total of those fractions that makes Food Lion more able to respond to the marketplace today.”
With his foundation of a dedicated senior staff and corps of associates, Anicetti allows himself to peer into the future of grocery retailing. He sees more attempts at home shopping, a greater emphasis on meals as opposed to ingredients, a continued focus on health and wellness, a more automated industry, more attention to senior shoppers, and a growing interest in a smaller store footprint.
In the short term, the future looks prosperous. Delhaize Group will step up store growth in fiscal 2008, particularly in its Food Lion division.
Delhaize said it would invest around $750 million in capital expenditures in the U.S. in fiscal 2008, with plans to include building 45 new stores in its Food Lion division. Thirty-two new Food Lion units opened in 2007. Anicetti expects to open 60 and 70 new stores in 2010.
He sums up: “By positioning ourselves conveniently in neighborhoods, we found that the combination of price, the kind of customer experience we’re trying to create, and the convenience of both our locations and the smaller nature of our footprint as well as density of our footprint in any particular market, is really going to be something that carries the day for us.”
Souorce: GroceryHeadquarters.com
Labels: Food Lion
Food Lion is "right-sizing" its Bottom Dollar Food discount concept with a new prototype unit opening today in Mooresville, N.C., about 40 minutes from Charlotte. The new 20,000 square foot store incorporates significant research and experience into the banner's redesign, Paul LaCroix, vp of Bottom Dollar Food told Progressive Grocer on Tuesday. 