Delhaize America has long been three separate companies, despite some sharing of resources and knowledge among Hannaford Bros., Food Lion and Sweetbay.
With the recent management reorganization, and the formation of Delhaize America Shared Services, however, the profile of the U.S. division of Brussels-based Delhaize Group is undergoing a profound change — what the company refers to as its “New Game Plan.”
“From a strategic point of view, 2009 was a year in which we strategically looked at the way our group should be organized to deliver the best efficiencies,” Pierre-Olivier Beckers, chief executive officer of both Delhaize Group and Delhaize America, told SN.
The company in December of last year announced a sweeping effort to reduce prices at its stores to bring them closer to the price leader in each market, part of what it called its New Game Plan. The initiative also involves expanding its discount banner — Bottom Dollar — and ramping up the focus on its health and wellness programs.
“We are convinced our consumers across the globe are more sensitive to prices,” Beckers said. “This is not cyclical; it is structural.”
In order to remain an industry leader in profitability with the new, more aggressive pricing scheme, Delhaize reorganized its operations in an effort to drive more synergies among its banners.
“We have always been proud of our local identity and the local banners that we had, and we strengthened those local banners over the years — it makes Delhaize unique,” Beckers said. “But we came to the conclusion we could not continue to operate in as decentralized a manner as we were used to operating. Hence the new game plan, aimed at operating as a much more integrated group — not a centralized group, but much more integrated.”
That has led to what he called the “new” Delhaize America.
“It is the replacement of what used to be three distinct operating companies — Food Lion, Hannaford and Sweetbay — to one company operating three distinct banners,” Beckers said. “What the customer continues to see doesn’t change, but the way we deliver product to customers is changing profoundly in 2010, thanks to the work we prepared in 2009.”
As part of the realignment, Ron Hodge, the longtime CEO of Hannaford Bros., became the CEO of Delhaize America operations, overseeing all the U.S. banners. Rick Anicetti, the longtime CEO of Food Lion, was named CEO of Delhaize America Shared Services, but he left within a few months of his appointment. He was succeeded by Carol Hernon, who had been senior vice president of accounting and finance for Delhaize America.
The moves should help maintain Delhaize as a leader in driving strong operating margins, said one analyst, who asked not to be identified.
Delhaize pledged to trim about $450 million a year from its costs by 2012.
Beckers said the company has seen some signs of economic recovery in the Northeast, but in the Southeast consumers remain under pressure.
“We see the consumer continues to struggle,” he said. “I think we have to take steps ourselves because we will not find relief by itself from inflation, or by consumers’ disposable income.
“It is a very difficult challenge, because it really forces companies to dance constantly between the long-term decisions and investments you have to make and the short-term pressures. Very few boards and very few management teams are able to do that on an ongoing basis — it takes tremendous discipline and consistency and vision to be able to do that.”