Through a special arrangement, what follows is an excerpt of a current article from Grocery Headquarters magazine, presented here for discussion.
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 percent to $18.2 billion, with a 3.8 percent comp increase called its best in more than 10 years.
Food Lion's recipe for success consists of a blend of "market renewal," multi-branding, consumer segmentation, and store clustering. 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 Mr. Anicetti. "We have really moved away from the sameness that described Food Lion for years."
Mr. 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."
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," Mr. 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 Mr. 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," Mr. 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."
Discussion Questions: What do you think of Food Lion's efforts to move away from the sameness the chain was formerly known for? What has most impressed you about its transformation?