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Companies Prosper by Chasing Change Across Decades

Companies Prosper by Chasing Change Across Decades

Much changes in 50 years. Much more changes in 140 years. Much more yet can be learned in either of those spans of time.

There are two interlinked companies that likely appreciate the veracity of those statements. As you'll see referenced on the front page of this week's SN, the companies are Food Lion, founded 50 years ago in Salisbury, N.C., and Delhaize, the Belgium-based parent company of Food Lion. Delhaize was founded 140 years ago. Learning and change must agree with these two companies, since companies don't survive 50 years without those attributes, much less do they survive 140 years.

Let's take a little closer look at these companies, starting with Food Lion. That company was founded as Food Town by brothers Ralph and Brown Ketner, plus a third partner. The three, all alumni of Winn-Dixie, took over a store site that a third Ketner brother, Glenn, a real estate developer, had been unable to sell.

The fledgling Food Town chain expanded to 16 stores in a decade's time, but it failed to prosper much. Ralph Ketner, now 87 years old, told SN's Mark Hamstra a few days ago that he vivified the company by funding dramatic price-point reductions through the initiation of vigorous forward buying. Price reductions pumped up sales volume, and increased profitability followed.

That change, made in 1968, was followed by an even bigger change in 1974, when a stake of about 35% was acquired in Food Town for a little more than $8 million by Delhaize. At the time, Delhaize was fettered by restrictive development strictures in its home country and was seeking expansion abroad. For many years, Delhaize remained a silent partner and reaped much benefit as its new holding in this country expanded rapidly and profitably. Food Town's banner was changed to Food Lion in 1982 when it bumped up against other operations called “Food Town” in adjacent states. Delhaize is known as “Le Lion.” (Curiously, Ahold, a Netherlands-based company, acquired Bi-Lo, Mauldin, S.C., just three years after Delhaize's Food Town acquisition. That's another story.)

Delhaize's tranquil strategy of benefiting by the benign neglect of its investment came to a halt when it decided to try it again, this time with the 1996 purchase of Kash n' Karry, Tampa, Fla. That company was no Food Town. It had been weakened by having endured multiple ownership changes, and had been through Chapter 11. In a short while, Delhaize learned it needed a new strategy, which, in a way, came to hand with the acquisition of Hannaford Bros. in 2000. With that purchase, it was decided that operations should be integrated under the rubric Delhaize Group.

What has emerged is an operation sharply different from the Food Town Delhaize acquired so many years ago. Then, Food Town, not unlike Wal-Mart, was characterized by a single format driven almost entirely by a low-price offer. Now, largely through the transplanting of learning from Hannaford, plus a couple of other small acquisitions, Delhaize operates a brand cluster that appeals to a wide variety of shoppers through banners Sweetbay, Bloom, Bottom Dollar, Harvey's, Reid's and Food Lion. Even the last is now venturing into exotic territory, such as bakeries and pharmacies.