March 29, 2012
Food Lion Continues Branding Makeover
Delhaize America has made quite a few changes in recent months. The company announced back in January that it was closing 113 Food Lion stores, retiring its Bloom banner and converting Bloom and Bottom Dollar Food store locations in three states to Food Lion units.
At the time, Ron Hodge, president of Delhaize America, said the actions would help "our company to focus on our successful brand strategy repositioning at Food Lion." The company began its rebranding efforts last May in the Raleigh and Fayetteville, NC markets, as well as in Chattanooga, TN.
Now comes word that Food Lion’s repositioning is progressing with the official launch of its new brand strategy in 268 stores in North Carolina, Virginia and West Virginia. Plans call for the strategy to be expanded to up to 700 Food Lions this year.
"We invite customers to visit their local Food Lion, where they will experience firsthand the enhancements we have made in our stores," said Cathy Green Burns, president of Food Lion, in a statement. "As part of our new strategy, we are committed to being recognized as a price leader, making our stores easier to shop, offering the greatest value in store brands and providing fresh produce."
Part of the new "price leader" image included Food Lion lowering prices on 6,000 items in its stores and pushing its tiered store brand lineup.
"We are very pleased with the reaction from our customers since we began rolling out our new brand strategy last year," Ms. Green Burns. "We look forward to winning new customers and continuing to serve our existing customers with enhanced Food Lion stores, and bringing the strategy to life in additional locations across our footprint later this year."
David Livingston, president of DJL Research and a RetailWire BrainTrust member, called Food Lion’s rebranding "window dressing" in an interview with the Richmond Times-Dispatch.
"A lot of this is what others have already been doing," Mr. Livingston told the paper. "This is a lateral move."
BrainTrust
Recent Discussions
Discussion Questions
Discussion Questions: Is Food Lion on the right track with its new brand strategy? What types of changes can grocers make that can provide a sustainable advantage in the current competitive environment?
Poll
I’d agree with David — it’s a lateral move to remain competitive.
If price is the anchor of the new brand strategy then I would say — based solely on this report — that Food Lion is off to a poor start. Announcing that you are lowering the price on 6,000 items is another way of saying you’ve been price uncompetitive on thousands of items, i.e., you’ve been overcharging but — cross your heart and hope to die (wink, wink) — you’ve seen the error of your ways and promise not to do the bad price thing again. In short, it isn’t very reassuring to customers.
Ditto for the notion of a “tiered” store brands approach. If you believe in your quality and you are trying to make a powerful statement then you have to reduce the complexity of the store brand decision as much as possible. In a perfect world, which clearly we don’t live in, that would mean one strong high quality, high value choice.
Finally, if your brand promise is built around price you are committing yourself to constant, perpetual margin erosion if you compete against Walmart which means: (a) you believe you can consistently beat them at their own game over time; (b) you will eventually go out of business; or (c) you plan on building “hidden margin” back into your non-sale items so your pricing policy isn’t transparent or honest.
Other than that, sounds like a fine plan.
Well we know they can’t follow through being a price leader. There is a reason why they have such low volume stores. Walmart is the price leader. There can only be one leader and Food Lion isn’t it. Every grocer at one time or another will claim to be lowering “6,000” prices. But we all now that the price reductions are minimal and that thousands of prices must be raised to make up for it.
“Stores easier to shop, offering the greatest value in store brands and providing fresh produce.” Okay, this is what every chain grocer claims to have. So what is really different? Are they saying before the changes they didn’t have fresh produce? “We are very pleased with the reaction from our customers.” Have you ever heard a company ever in your life say they were not pleased with the reaction from their customers? I hate these kind of stories. Especially from a chain that consistently operates stores at sales per square foot levels well below their competitors. There is a reason Food Lion had to close 113 stores. Now that’s something they can be a leader at, closing stores.
It seems as though Food Lion,
Scion of past southern pride,
Thinks its new brand strategy
Will assure its future ride.
But cutting prices isn’t new,
And adding more Food Lion signs
In a jungle where tigers roam
Doesn’t assure against declines.
With a tough fourth quarter period, Delhaize is shaking things up. But let’s be clear, this is not a company in dire straits. They have solid operating margins, a strong balance sheet and plenty of liquidity. They don’t need to be the price leader, just price competitive with a fresh store format. Many consumers don’t want to shop Walmart, if they can avoid it. Offering consumers lower competitive pricing, albeit not the lowest, and clean, fresh store is enough to keep them away from Wally World. Nevertheless, perhaps the larger (potential) threat to Food Lion is if Publix decides to be more aggressive and expands further north into Food Lion’s market areas.
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I’d agree with David — it’s a lateral move to remain competitive.
If price is the anchor of the new brand strategy then I would say — based solely on this report — that Food Lion is off to a poor start. Announcing that you are lowering the price on 6,000 items is another way of saying you’ve been price uncompetitive on thousands of items, i.e., you’ve been overcharging but — cross your heart and hope to die (wink, wink) — you’ve seen the error of your ways and promise not to do the bad price thing again. In short, it isn’t very reassuring to customers.
Ditto for the notion of a “tiered” store brands approach. If you believe in your quality and you are trying to make a powerful statement then you have to reduce the complexity of the store brand decision as much as possible. In a perfect world, which clearly we don’t live in, that would mean one strong high quality, high value choice.
Finally, if your brand promise is built around price you are committing yourself to constant, perpetual margin erosion if you compete against Walmart which means: (a) you believe you can consistently beat them at their own game over time; (b) you will eventually go out of business; or (c) you plan on building “hidden margin” back into your non-sale items so your pricing policy isn’t transparent or honest.
Other than that, sounds like a fine plan.
Well we know they can’t follow through being a price leader. There is a reason why they have such low volume stores. Walmart is the price leader. There can only be one leader and Food Lion isn’t it. Every grocer at one time or another will claim to be lowering “6,000” prices. But we all now that the price reductions are minimal and that thousands of prices must be raised to make up for it.
“Stores easier to shop, offering the greatest value in store brands and providing fresh produce.” Okay, this is what every chain grocer claims to have. So what is really different? Are they saying before the changes they didn’t have fresh produce? “We are very pleased with the reaction from our customers.” Have you ever heard a company ever in your life say they were not pleased with the reaction from their customers? I hate these kind of stories. Especially from a chain that consistently operates stores at sales per square foot levels well below their competitors. There is a reason Food Lion had to close 113 stores. Now that’s something they can be a leader at, closing stores.
It seems as though Food Lion,
Scion of past southern pride,
Thinks its new brand strategy
Will assure its future ride.
But cutting prices isn’t new,
And adding more Food Lion signs
In a jungle where tigers roam
Doesn’t assure against declines.
With a tough fourth quarter period, Delhaize is shaking things up. But let’s be clear, this is not a company in dire straits. They have solid operating margins, a strong balance sheet and plenty of liquidity. They don’t need to be the price leader, just price competitive with a fresh store format. Many consumers don’t want to shop Walmart, if they can avoid it. Offering consumers lower competitive pricing, albeit not the lowest, and clean, fresh store is enough to keep them away from Wally World. Nevertheless, perhaps the larger (potential) threat to Food Lion is if Publix decides to be more aggressive and expands further north into Food Lion’s market areas.