Food Lion trying out new strategy
By Emily Ford
SALISBURY — Food Lion will bring its new brand strategy home on Wednesday, launching in Salisbury stores the combination of lower prices, more convenience and better fruits and vegetables the company has pinned its hopes on.
Salisbury and Rowan County stores are among 269 in North Carolina and South Carolina where Food Lion will unveil the changes. Food Lion’s corporate headquarters are in Salisbury, where the company was founded in 1957 as Food Town.
As of Wednesday, Food Lion will have more than 700 locations operating under the new strategy, or more than 60 percent of its store base. The strategy first launched in the Raleigh and Fayetteville markets in May 2011, with an additional 268 rebranded stores earlier this year in the Outer Banks, Virginia and West Virginia.
Bringing the new strategy to Salisbury has been emotional, said Cathy Green Burns, president of Food Lion, who visited the Faith Road store Friday.
“I can’t tell you the pride and responsibility we feel,” Green Burns said.
Green Burns called Wednesday’s launch “a pivotal turning point for our company.”
Food Lion’s parent company, Delhaize America, has struggled with its bottom line and saw fourth quarter 2011 profits drop by 48 percent to $355 million.
Food Lion makes up the lion’s share of Delhaize, and rebranded Food Lion stores have shown an increase in sales, with more transactions at the checkout and more items in shopping carts.
Green Burns credits the new strategy, which is based on extensive consumer research and feedback from Food Lion customers.
“It’s the flywheel for improving our business over time,” she said. “It positions the company for future success.”
The strategy overhauls three crucial areas — price, convenience and produce.
“Most consumers see grocery shopping as drudgery,” Green Burns said. “We’re trying to change that.”
Less cluttered aisles, more employees staffing checkout lanes, a larger variety of fruits and veggies and other changes should make a difference for Food Lion shoppers, she said.
“The whole shopping experience should feel simple,” Green Burns said. “It should be filled with quality. And they also should experience a different level of price in their total shopping bill than maybe what they’ve experienced in the past.”
Shoppers will see lower prices on 6,000 items and a new focus on store brands like My Essentials, Home 360 and Healthy Accents.
Food Lion removed the cardboard displays from aisles that often served as obstacles rather than incentives. Less clutter gives the appearance of more space, even though dimensions stay the same.
“Consumers told us they really don’t want to play bumper cars when shopping,” Green Burns said.
To support the new strategy, Food Lion added about 800 new jobs in North Carolina and South Carolina.
In January, Delhaize America closed 113 underperforming Food Lion stores, pulled out of Florida and retired the Bloom banner. About 4,900 jobs were cut.
No stores in Rowan County were closed.
As part of the closings, Food Lion accelerated roll-out of the new brand strategy.
An employee called a service leader will direct cart traffic at the checkout lanes, helping shoppers find the fastest line.
Associates have been trained on a one-touch method, where they scan and bag each item in succession, rather than letting groceries pile up at the end of the conveyor belt.
Easier-to-read shelf tags spell out the cost of items per ounce.
“People are time-starved, and they don’t want to do algebra to figure out the price of a product,” Green Burns said.
She said she’s “very pleased” with growth at stores that have implemented the new strategy.
In the first quarter of 2012, growth continued to accelerate in phase one stores — Raleigh, Fayetteville and Chattanooga, Tenn.
Comparable store sales grew by 2.9 percent, outperforming the rest of the Food Lion network by 5 percent. Volume increased 1.8 percent, with the strongest quarterly increases in the number of transactions (4 percent) and number of items sold (2.5 percent) since the launch in May 2011.
That indicates Food Lion is gaining customers, and those customers are spending more in the stores, Green Burns said.
Phase two stores — about 250 locations in Virginia — have “enjoyed significant increases in both sales and transactions,” the company said in a statement.
The positive changes have not yet translated into investor confidence. Delhaize stock, which sold at $75 a share a year ago, closed at $32.90 on Friday.
Traditional supermarkets’ share of grocery sales fell to 51 percent in 2011, down from 66 percent in 2000 according to the UBS Group, due in part to big-box discounters like Walmart and Target.
Green Burns remained optimistic and said Food Lion’s decision to listen to customers will mark a turning point for the company.
“I pledge I will not change one element of our strategy until consumers tell us to,” she said.
Contact reporter Emily Ford at 704-797-4264.