DISCUSSION

Will Food Lion's Rebranding Effort Pay Off?

May 16, 2013Written by George Anderson

In a series of announcements early last year, Food Lion announced it was closing some locations and beginning a brand repositioning in 268 stores in North Carolina, Virginia and West Virginia. The focus, as the rebranding effort has been expanded to 178 more stores in five states, has been on improving the customer experience.

Stores have increased training for associates, while floor plans have been reworked to provide clutter-free aisles. Bathrooms are to be kept clean, product handling has been improved in produce and meats, and stores have improved the amount of time it takes to move customers through the checkout.

Danny Scruggs, manager of the North East (MD) Food Lion, told the Cecil Daily that eight new people had been added to his store's staff. He trained with them on improving the shopping environment for consumers. Mr. Scruggs mentioned that bathrooms in the store are cleaned seven times a day and the job of quality assurance associates "is to make sure the stores are clean."

A key emphasis of the rebranding effort has been in fresh departments. As other grocers have done, Food Lion is promoting local sourcing with the chain's "Fresh From the Field" initiative. The company is backing its produce quality with a double-your-money-back guarantee.

As in other markets where Food Lion has rebranded, 6,000 items have had their prices reduced. Christy Phillips-Brown, a spokesperson for the chain, said the changes affected items in categories across the store. "Our goal is to be the recognized price leader in our market," she told the Cecil Daily.

While Food Lion remains higher priced than Walmart, Frederic van Daele, VP investor relations at Delhaize Group, said the gap had narrowed from a range of six to eight percent to five percent. Mr. van Daele offered this information in an exchange with an analyst during the company's first quarter conference call.

With the addition of the newly remodeled locations, Food Lions said it has rebranded nearly 80 percent of its stores. The company reported a same-store sales increase of 1.9 percent in the first quarter this year compared to flat comps in the fourth quarter. Rebranded stores had comp store sales more than five percent higher than those not yet rebranded.

A March 2012 RetailWire poll found that 54 percent thought Food Lion was somewhat or very unlikely to succeed with its new branding strategy. Forty-six percent thought it was somewhat likely to succeed.

Discussion Thread0