SALISBURY, N.C. — Food Lion this week is launching a "back to basics" strategy at its stores in two markets focusing on accelerated price reductions, more private brands, cleaner stores and increased service.
Sales fliers promoting "a new Food Lion" broke Wednesday in Chattanooga, Tenn., and Raleigh, N.C., with plans to rebrand additional markets during 2012, Cathy Green Burns, president of Food Lion, said in a conference call Wednesday.
Burns said the changes — designed to increase market share and top-line growth for Food Lion — come in response to market-wide survey data indicating Food Lion had lost some of its reputation for price and quality.
"Based on what we heard from consumers we need to get back to the basics," Burns said. "Food Lion has a history of being recognized for its low prices and for the quality and value it delivers better than anyone … Over the years, we lost some of those attributes."
The strategy calls for "very competitive prices" — described as an acceleration from a chainwide pricing strategy in place since 2010 — along with an aggressive goal of increasing private brand penetration from 26% currently to 35% by 2013, Burns said.
A new private label, My Essentials, which will replace the Smart Options brand, will be a key component, she added.
The effort will also encompass more attention to on-shelf merchandising plans and off-shelf space allocated to end caps and other product displays, which Burns said would accompany an integrated marketing strategy.
Stores in the program in the meantime will be clean and easy to shop, Burns said, with improved lighting in parking lots, and new signs and price tags.
The announcements came as Delhaize reported that sales were essentially flat at $4.7 billion and comps decreased by 0.3% during the first quarter, compared with year-ago results. Operating profits in the U.S. dropped 13% to $216 million, mainly as a result of higher costs for store construction and maintenance, and sales initiatives at Bottom Dollar Food and Food Lion stores.