Fresh approach driving growth at Food Lion

JANUARY 22, 2016 | BY MIKE TROY

Delhaize Group’s Food Lion division is enjoying success with an extensive transformation initiative called “easy, fresh and affordable,” as it works to complete a pending merger with Royal Ahold.

Delhaize President and CEO Frans Muller, singled out the improved performance of Food Lion in the Raleigh-Durham area as a key driver of an inflation-adjusted 3.3% increase in sales at the Belgium-based company’s U.S. division, Delhaize America.

“In 2015, in line with our strategy outlined two years ago, we kept our focus on our customers and made good progress on our strategic initiatives,” Muller said. “Specifically at Food Lion, the revenue uplift from ‘easy, fresh and affordable’ is delivering according to plan and costs are under control.”

Last year, Food Lion spent $250 million to remodel and re-merchandise 162 stores in the Raleigh-Durham area of North Carolina. Emphasis was placed on improving the quality of fresh departments, expanding the selection of natural, organic and prepared foods, upgrading in-store technology at the checkout and investing in price. In addition, the retailer put in place a new three-tier pricing scheme which included weekly “hot sale” items available to holders of its MVP loyalty card, “WOW” prices on key high velocity items and “low prices” on essential items throughout the store. Then, to reintroduce the Food Lion brand and store experience to shoppers the company gave away free groceries to the first 100 customers at each of its stores in the Raleigh-Durham trading area on Oct. 14, 2015.

With efforts in the Raleigh-Durham area as a blueprint, Food Lion this year plans to roll out the major changes to an unspecified number of markets in the 10 southeastern and mid-Atlantic states where it operates 1,100 stores.

With some apparent momentum gathering at Food Lion, parent company Delhaize Group anticipates the merger with Royal Ahold announced last June will be completed by mid-year. The deal will combine two European-based food retailers with a sizable U.S. presence to create a company with combined annual sales of more than $60 billion operating primarily along the East Coast. Ahold operates the Stop & Shop and Giant chains, as well as online grocery store Peapod, while Delhaize owns Hannaford stores in addition to Food Lion.

Last fall, the company’s announced a new senior leadership team to lead the combined entity.