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More Changes Ahead for Food Lion, Says New Delhaize CEO

SALISBURY, N.C. — Making his first public pronouncements since taking charge of Delhaize America four months ago, Roland Smith pledged to accelerate the repositioning of Food Lion; increase price competitiveness at Hannaford; and optimize the Bottom Dollar format.

Speaking at a conference call last week reviewing Delhaize Group’s fourth quarter financial results, Smith said he’d evaluated “hundreds” of initiatives that Delhaize was working on before his arrival as chief executive officer of Delhaize America last fall and identified 15 that were critical. Of these he highlighted four last week — the previously announced streamlining of the company’s senior leadership and headquarters workforce, and initiatives at Food Lion, Hannaford and Bottom Dollar.

Roland Smith
Roland Smith

“I believe it’s important that we focus our resources, people, money and time on the few critical priorities that will ensure we achieve our goals in 2013 and beyond,” Smith said.

Among the changes is an end to a test of running fewer promotions in favor of more competitive everyday shelf pricing, which officials launched in the dairy and frozen departments at rebranded Food Lion stores in October. Although company officials had expressed intentions to expand that test to additional categories, Smith last week said the program did not effect volume increases to the degree the company was hoping to see in the category or the store.

“I can confirm that we saw some clear volume increases and we saw some nice customer response, [but] these volume increases were not across all of our categories and they were not to the level that we were hoping for,” he said.

The change — described by officials as a change in the mix of price promotions and shelf pricing late last year, was intended to defend the gains Food Lion made as a result of its rebranding initiatives, which included heavy investments in lower everyday prices.

Smith said accelerating those transformations at Food Lion was his “most important priority” for fiscal 2013. He said a new round of rebranding would begin in May bringing 80% of Food Lion’s stores to the new standards, while the company will focus on new ways of communicating those changes to customers.

“While we are pleased with the continued progress at Food Lion, we know that we must continue to grow sales and market share and we also must better differentiate Food Lion from its competition,” Smith said. “To ensure we accomplish this, we are now focused on more clearly identifying Food Lion’s unique selling proposition.”

Smith said he would reveal additional details about that transformation during the company’s investor conference in May.

Smith said Delhaize would continue to invest in price at Hannaford, which is facing more price competition in its Northeast markets.

Read more: Delhaize Eliminates 500 Jobs as Part of Broad Restructure

“Hannaford continues to perform very well on the key customer needs except for price. So in 2012 we invested in targeted price reductions at Hannaford in an effort to address this issue and improve price perception,” Smith said.

“As a result of these efforts Hannaford experienced positive item growth and improved transaction trends [in the fourth quarter]. This year we will continue to improve our overall price competitiveness, which we believe will drive sales momentum at Hannaford.”

Smith said Delhaize would work on reducing costs and driving sales volumes at Bottom Dollar stores before committing to further expansion of the discount banner.

Costs of store closures and decreased margins as a result of price investments triggered underlying profits at Delhaize’s U.S. operations to decline by 17.5% in the fiscal year, which ended Dec. 29, officials said, confirming preliminary figures announced in January.

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