CHARLOTTE, N.C. -- An integrated corporate structure and a focus on accountability and learning have transformed Delhaize Group's U.S. operation from a disorganized, debt-ridden collection of struggling stores to a stronger, more consistent organization with a strong brand identity and sales exceeding the industry average, said Pierre-Olivier Beckers, chief executive officer of Delhaize, at an investor conference here.
"If you go back to 2001, you'll see we weren't a group. We were a loose affiliation of independent companies with little link of any sort," Beckers said. "We had underperforming, non-strategic banners and stores. Our sales were underperforming. Our concepts needed strategic thinking, and our debt leverage was huge."
Delhaize at the time had incurred debt as the result of its purchase of the Hannaford Bros. chain, which provided the Brussels-based company with stores all along the East Coast ranging from Kash n' Karry in Florida to Food Lion in the Carolinas and Virginia to Hannaford in New England. However, he said, it wasn't until Delhaize executives focused on the companies working together and sharing that the performance as a whole improved.
Using a series of short-term and long-term initiatives that are "easy to say, but difficult to accomplish," Beckers said, each Delhaize USA division focuses its initiatives on five core issues: concept leadership, executional excellence, creating a learning organization, making the company an attractive place to work, and good citizenship.
Concept leadership initiatives develop from studies that note what Beckers called a "multidimensional culture," which is dominated by overarching and polarized concerns. For example, people increasingly "cocoon" at home, but love travel. They live in a time of great technological advances, but desire simplicity in their everyday lives. People shop at different stores for different needs, he explained. These notions led Delhaize to create Bloom, a store that addresses a consumer desire for convenience, he said. Sweetbay, the new banner that will replace Kash n' Karry in Florida, addresses ethnic diversity. Other initiatives address issues of aging, obesity and trust.
Executional initiatives are focused on such issues as improving costs and efficiency, Beckers said. At Food Lion, for example, the market renewal program in Raleigh-Durham this year cost 20% less than the initial Charlotte market renewal.
Beckers said Delhaize's divisions are "passionate about learning and sharing," and that exchanges of best practices between divisions "is highly motivating. It's a pull and not a push."
Delhaize has also been focused on making itself an "enriching, stimulating and rewarding" place to work, offering attractive pay, as well as training and development. He added that good citizenship is another focus because "we think doing good is good for business."
In other presentations at the investor conference, Rick Anicetti, chief executive officer at Food Lion, described how that chain's philosophical shift from a buy-side to a sell-side organization has been key to its turnaround.
"The Food Lion of six or seven years ago was essentially a warehouse and distribution company that just happened to have lots of outlets to move products. We were a buy-side organization," Anicetti said. "We know now to succeed. We must be on the sell side." According to Anicetti, Food Lion has reduced the inventory value at its warehouses by around $300 million over that period, despite adding 200 more stores. The changes have been sparked by interviews with more than 5,000 customers and store associates over recent years, and is resulting in a retailer more focused on the brand message of its Bloom, Food Lion and Harvey's stores.