September 15, 2006
PLBuyer Cover Story: Three Sizes Fit All
By Lori Sichtermann
Through special arrangement, we offer this excerpt from PLBuyer’s recent cover article for discussion on RetailWire. Click to view the entire article,
Three Sizes Fit All.
You can’t be all things to all people. That was the lesson learned by Food Lion when it spoke to shoppers at its 1,200 or so stores in 11 states along the Atlantic coast.
What Food Lion could be was more responsive to the needs of individual consumers in specific markets and that was the motivating factor behind the company’s decision to launch three separate banners – Food Lion, Bloom, Bottom Dollar Foods – each with a specific niche to fill.
“Some customers might be looking for a novel experience, some may just want to save money, and others may want their traditional, neighborhood Food Lion store. Where other stores may try to cram all these customer desires into one store, we decided that the best thing to do was diversify and have a multi-banner strategy,” said Kimberly Blackburn, corporate communications manager for Food Lion LLC.
Food Lion
The future of the flagship Food Lion banner can be found in Lyman, S.C. As part of its research effort, Food Lion found that, while many consumers go to supercenters, they don’t necessarily prefer to shop in the behemoth stores.
The store in Lyman is a first for Food Lion. The 35,000-square-foot store does away with the box-like design found littering the retail landscape. The entrance has a gabbled roof, making the store more home-like and welcoming. Inside, customers are greeted by fresh produce located in a setting that resembles an outdoor farmer’s market. The store’s design is spacious, organized and simple, featuring a unique layout that enables one section to flow smoothly into the next.
“We gave some serious thought into how to group items,” said Jeff Lowrance, corporate communications manager for Food Lion LLC. “If a customer’s coming in to pick up a few things for tonight’s dinner, we wanted to have wine and natural products close to produce, meats and deli-bakery. We wanted to group all that together so as to make it easier for customers when they come in to shop.”
Fresh departments are given special emphasis along the right side of the store, beginning with produce, then leading to the deli-bakery and reaching the back of the store with the fresh meats. However, as the sections merge into one another, each holds prominent the well-identified Food Lion brand of products, which includes approximately 2,900 types of food and non-food items.
The company is very focused on developing new products in its private label along with a number of exclusive brands it sells.
“The launch of Butcher’s Brand Premium Beef has positioned our beef business in a very positive way,” said Pete Bonneau, leader of private label for Delhaize Group U.S. “Butcher’s Brand has helped to reposition folks’ perception of Food Lion within the meat business.”
Another success story is Food Lion’s Braidenwood Estates wine. First introduced last year, ACNielsen named it the top selling branded wine in an 11.25-ounce bottle.
“Quality is not debated,” said Mr. Bonneau. “We’re not here to make private brand products to lessen our image of quality with the product. It’s more about looking at the products that are out there; it’s about asking if there’s enough volume to support another brand in the category. That’s really the decision tree we use.”
Bloom
Similar in layout to the store in Lyman, S.C., is the 38,000 square-foot Bloom prototype. It carries many of the same items as Food Lion but distinguishes itself with a chic ambiance featuring inset lighting behind produce shelving units that casts wave-like shadows on the wall as well as the sound of a running stream piped into the produce area.
“Bloom has everything from the routine to the exotic, we even sell sugar cane,” said Karen Peterson, media relations for Bloom. “You can find items here that you typically wouldn’t be able to find anywhere else. It’s like a specialty store with traditional grocery store pricing.”
On the tech front, Bloom offers shoppers hand-held scanners so they can scan items as they move through the store. Stores also offer shoppers self-checkout stations and even mobile registers. The mobile registers are used to alleviate long lines and lost time for shoppers. These registered are outfitted with wireless checkout features, and can be used to expedite checkout in many areas of the store, inside and out.
Bloom is all about convenience, quality and service, said Ms. Peterson. “Customers don’t have to use the technology that’s in place in each of the Bloom stores, but it’s there as an option for those who want that kind of shopping experience.”
Bottom Dollar Food
The Bottom Dollar Food banner means combining elements of a traditional grocery store, convenience store and dollar store under one roof with extreme value pricing.
The division’s 15 stores are not your typical bare bones limited assortment store environments. Walls are splashed with bright green and neon orange paint and cheerful music is piped in throughout the store.
Unlike typical discount stores, Bottom Dollar Food features a sizeable fresh produce section and an on-site butcher who can cut-to-order meats for customers.
The store is able to deeply discount items because it saves by displaying product on palates and in boxes on the shelf. Customers purchase or bring their own bags to the store and also do their own bagging.
Discussion Questions: How will the combination of the three formats affect Food Lion’s competitive position? What formats do you believe Food Lion will
emphasize for new store openings to reach its sales objectives?
Food Lion is not currently operating all three concepts within a given market but it does have plans to do just that, according to PLBuyer.
We’re not sure that Food Lion has found a compelling point of difference for the Food Lion format as of yet. From the reports we’ve received, the Food Lion
stores are still mostly of the plain vanilla variety with remodeled units being described as little more than a slightly less upscale version of Bloom without any of the technological
advances of the newer concept. – George Anderson
BrainTrust
Recent Discussions
Discussion Questions
Poll
Food Lion’s ability to segment the available shopper base into three different formats significantly expands their opportunity to satisfy a broader number of shoppers. As for which format to deploy where, the demographics of the neighborhood should make it easy to determine which format to choose. Few retailers have this ability.
For anyone wanting to know more about Food Lion you really should visit all three of their concepts. Food Lion has quietly changed a great deal throughout their operation. From the tongue in cheek approach in the Bottom Dollar concept to the learning laboratory that is Bloom. If you haven’t taken the time to visit their flagship banner stores in the last three or four years you may not recognize them.
The three Food Lion formats currently project potential gain. It’s their main attraction. But today’s attractions must be followed by tomorrow’s substance. Let’s watch closely to see how well each of these three format manages itself as vicissitudes will continue in the marketplace and challenge them anew. For me, the jury is still out.
I support previous comments: Food Lion is following the direction of differentiation to provide consumers with what they want. In addition, the difficulty is making sure that each concept store is located in an area in which there are enough profitable consumers to regularly visit the store.
Once the concept of the store is determined and outfitted, the job is not over. Then continued monitoring, adjustment, and assessment are necessary to keep up with consumer changes in taste, product choice, and lifestyle. However, this is certainly a noteworthy beginning.
What Food Lion is attempting to execute is what we have been preaching for over 10 years. The mass market in America no longer exists except if there is only one store in town. The concept of market segmentation by format has generally failed in USA, but is the norm around the world. The difficult task is keeping true to the concept over time. Just because it is a good deal does not mean the item should be stocked in all formats. Certain economies of scale are lost with different formats, but the go-to-market path should be different anyway to be successful.
Food Lion is making a move that many retailers have tried over the last few years. The difference is they are doing it right and doing it aggressively. Food Lion’s 3 format strategy is absolutely a formula for success.
As the consumer dynamic continues to change and shopping trips become more complicated due to channel shifting and consumption changes, it has become necessary now, more than ever, to go to market differently. Each format has a different product mix, advertising strategy, operational efficiencies, and P&L makeup. Essentially, Food Lion’s priority is to keep consumers in their stores, no matter what the banner is.
Food Lion’s strategy is a great opportunity for them to differentiate their markets with target market segmentation. This will enable them to maximize their core competencies while offering differentiated products in unique store settings. They can then address different marketplaces while essentially capitalizing on their ability to better negotiate pricing, logistics, product availability and promotions to each of their segmented customers.
Personally, I think Food Lion has taken a very brave step in order to find differentiation from traditional price based retailing strategies.
We have been talking about customer centricity, enhanced shopping experience and occasion based merchandising for a long time now. It’s refreshing to see a retailer introducing these concepts into their business. However, such a large scale change affects the entire company. Re-education to corporate and store teams needs to be completed. Business process re-engineering is key to ensuring that these new concepts and strategies are supported. This isn’t going to happen overnight.
Food Lion has invested heavily in relation to technology, research and store refits to start and make these changes. The next few years will provide insight into how successful they have been.
Having walked the three store types recently, I was extremely impressed by the look and feel; the attention to detail. The Bloom format created a very pleasant shopping experience and you could see the change in merchandising to support the occasion shopping strategy.
The majority of stories appearing on here are showing how retailers have to become far more customer focused in today’s environment to remain competitive. Food Lion is embracing that mission. They just need time to allow the metamorphosis to take place!
I think Food Lion’s onto a viable strategy starting with the premise that one size does not fit all. Each of their three concepts seems designed to appeal to a specific shopper segment (from low price, no frills thru regular FL store format up to higher end “experiential” shopping with the soft lights and water sounds).
In a larger city, there is certainly the potential to have each concept operating in different neighborhoods in the market. From a competitive stance, FL should pick up share since they will be able to offer a range of store formats that appeal to a broader spectrum of consumers.
Like many strategies, the devil is in the executional details – can FL place the right format in the correct area and efficiently implement all of the operational and logistic requirements well?
Although Delhaize (Food Lion’s parent) stock doesn’t show consistent trends, its performance isn’t embarrassing. The stock is $77 today compared to $55 five years ago. Generally, Delhaize has been a reasonably disciplined supermarket company with decent financials. It’s reasonable to assume Food Lion has good financial controls, and will carefully measure its progress before an aggressive rollout of the 3 new formats.
Frank’s directionally correct, but the devil is in the details. Subsegmentation is a great concept provided you do it correctly and keep it fine tuned. Neighborhoods change and assumptions are dangerous but clearly no one size fits all — well.
Food Lion has adapted all of Hannaford Bros’ marketing and business savvy. Out of this comes testing and then change. Food Lion has, remarkably, done well since the change in strategic thinking and utilizing marketing.
So, Food Lion took another smart step, like Publix, Schnuck’s, Harris Teeter, Roche Bros, D & W, Byerly’s, Ukrop’s, Marsh – to name some leaders in industry innovation – and micro-marketed to the neighborhood it was serving. A major Hmmmmmm, and bravo for a very consumer marketing oriented supermarket chain!
So far the execution of the new Food Lion, with Bloom and BottomDollar is going smoothly. They are transforming stores in the metro DC area into either Bloom or BottomDollar. I am particularly impressed by Bloom. The stores are well stocked, tranquil, with good pricing and great selection.
Similarly A&P has executed their approach with fresh stores, gourmet stores, Food Basics and traditional stores. This is working for them as well. There execution has been concentrated in NY/NJ and as these stores roll out, the various concepts will be expanded chain wide.
I feel that both A&P and Food Lion are giving the consumer what they want; good quality, fresh food at reasonable prices. Both chains encourage their customers to show several of their varieties, to get the absolute value and selection they desire.
What I like about both concepts from both retailers is that the house brands are of high quality. Master Choice and America’s Choice at A&P family stores and Bloom and Food Lion brands at their various formats gives the customer quality and value. This is what the customer expects.
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Food Lion’s ability to segment the available shopper base into three different formats significantly expands their opportunity to satisfy a broader number of shoppers. As for which format to deploy where, the demographics of the neighborhood should make it easy to determine which format to choose. Few retailers have this ability.
For anyone wanting to know more about Food Lion you really should visit all three of their concepts. Food Lion has quietly changed a great deal throughout their operation. From the tongue in cheek approach in the Bottom Dollar concept to the learning laboratory that is Bloom. If you haven’t taken the time to visit their flagship banner stores in the last three or four years you may not recognize them.
The three Food Lion formats currently project potential gain. It’s their main attraction. But today’s attractions must be followed by tomorrow’s substance. Let’s watch closely to see how well each of these three format manages itself as vicissitudes will continue in the marketplace and challenge them anew. For me, the jury is still out.
I support previous comments: Food Lion is following the direction of differentiation to provide consumers with what they want. In addition, the difficulty is making sure that each concept store is located in an area in which there are enough profitable consumers to regularly visit the store.
Once the concept of the store is determined and outfitted, the job is not over. Then continued monitoring, adjustment, and assessment are necessary to keep up with consumer changes in taste, product choice, and lifestyle. However, this is certainly a noteworthy beginning.
What Food Lion is attempting to execute is what we have been preaching for over 10 years. The mass market in America no longer exists except if there is only one store in town. The concept of market segmentation by format has generally failed in USA, but is the norm around the world. The difficult task is keeping true to the concept over time. Just because it is a good deal does not mean the item should be stocked in all formats. Certain economies of scale are lost with different formats, but the go-to-market path should be different anyway to be successful.
Food Lion is making a move that many retailers have tried over the last few years. The difference is they are doing it right and doing it aggressively. Food Lion’s 3 format strategy is absolutely a formula for success.
As the consumer dynamic continues to change and shopping trips become more complicated due to channel shifting and consumption changes, it has become necessary now, more than ever, to go to market differently. Each format has a different product mix, advertising strategy, operational efficiencies, and P&L makeup. Essentially, Food Lion’s priority is to keep consumers in their stores, no matter what the banner is.
Food Lion’s strategy is a great opportunity for them to differentiate their markets with target market segmentation. This will enable them to maximize their core competencies while offering differentiated products in unique store settings. They can then address different marketplaces while essentially capitalizing on their ability to better negotiate pricing, logistics, product availability and promotions to each of their segmented customers.
Personally, I think Food Lion has taken a very brave step in order to find differentiation from traditional price based retailing strategies.
We have been talking about customer centricity, enhanced shopping experience and occasion based merchandising for a long time now. It’s refreshing to see a retailer introducing these concepts into their business. However, such a large scale change affects the entire company. Re-education to corporate and store teams needs to be completed. Business process re-engineering is key to ensuring that these new concepts and strategies are supported. This isn’t going to happen overnight.
Food Lion has invested heavily in relation to technology, research and store refits to start and make these changes. The next few years will provide insight into how successful they have been.
Having walked the three store types recently, I was extremely impressed by the look and feel; the attention to detail. The Bloom format created a very pleasant shopping experience and you could see the change in merchandising to support the occasion shopping strategy.
The majority of stories appearing on here are showing how retailers have to become far more customer focused in today’s environment to remain competitive. Food Lion is embracing that mission. They just need time to allow the metamorphosis to take place!
I think Food Lion’s onto a viable strategy starting with the premise that one size does not fit all. Each of their three concepts seems designed to appeal to a specific shopper segment (from low price, no frills thru regular FL store format up to higher end “experiential” shopping with the soft lights and water sounds).
In a larger city, there is certainly the potential to have each concept operating in different neighborhoods in the market. From a competitive stance, FL should pick up share since they will be able to offer a range of store formats that appeal to a broader spectrum of consumers.
Like many strategies, the devil is in the executional details – can FL place the right format in the correct area and efficiently implement all of the operational and logistic requirements well?
Although Delhaize (Food Lion’s parent) stock doesn’t show consistent trends, its performance isn’t embarrassing. The stock is $77 today compared to $55 five years ago. Generally, Delhaize has been a reasonably disciplined supermarket company with decent financials. It’s reasonable to assume Food Lion has good financial controls, and will carefully measure its progress before an aggressive rollout of the 3 new formats.
Frank’s directionally correct, but the devil is in the details. Subsegmentation is a great concept provided you do it correctly and keep it fine tuned. Neighborhoods change and assumptions are dangerous but clearly no one size fits all — well.
Food Lion has adapted all of Hannaford Bros’ marketing and business savvy. Out of this comes testing and then change. Food Lion has, remarkably, done well since the change in strategic thinking and utilizing marketing.
So, Food Lion took another smart step, like Publix, Schnuck’s, Harris Teeter, Roche Bros, D & W, Byerly’s, Ukrop’s, Marsh – to name some leaders in industry innovation – and micro-marketed to the neighborhood it was serving. A major Hmmmmmm, and bravo for a very consumer marketing oriented supermarket chain!
So far the execution of the new Food Lion, with Bloom and BottomDollar is going smoothly. They are transforming stores in the metro DC area into either Bloom or BottomDollar. I am particularly impressed by Bloom. The stores are well stocked, tranquil, with good pricing and great selection.
Similarly A&P has executed their approach with fresh stores, gourmet stores, Food Basics and traditional stores. This is working for them as well. There execution has been concentrated in NY/NJ and as these stores roll out, the various concepts will be expanded chain wide.
I feel that both A&P and Food Lion are giving the consumer what they want; good quality, fresh food at reasonable prices. Both chains encourage their customers to show several of their varieties, to get the absolute value and selection they desire.
What I like about both concepts from both retailers is that the house brands are of high quality. Master Choice and America’s Choice at A&P family stores and Bloom and Food Lion brands at their various formats gives the customer quality and value. This is what the customer expects.