Delhaize Group has made great progress in making its American chains function more like a single company to create efficiencies, Pierre-Olivier Beckers, the company's chief executive officer, told SN in an interview.
“The challenge of the integration of Delhaize America is absolutely equal to doing a heart transplant on someone while he or she is running a marathon,” he said.
The effort began at the end of 2009, and has included combined procurement efforts and a more streamlined management structure.
“With the creation of a single company with a single team and a single culture, we are creating major back-office efficiencies and savings opportunities,” Beckers said.
He described the strategy of deep cost cuts — the company is targeting 500 million euros, or about $700 million U.S., in savings annually — as providing the “financial fuel” to drive top-line growth.
Among those sales-growth initiatives has been a relaunch of Delhaize's largest banner, Salisbury, N.C.-based Food Lion. The effort involves taking the banner “back to basics,” as Beckers described, with a sharp focus on price.
The relaunch has been implemented in about 200 stores in the Raleigh, N.C., and Chattanooga, Tenn., markets.
“What we realized, in our humility, was that in the last decade we made Food Lion more complex, added some cost, and lost some of the pricing edge we used to have, and we created dissatisfaction with customers,” Beckers explained. “We are bringing back a shopping experience that is simple, quality based and with low prices. We are investing in the full book of prices across the board, and investing in people so we can be more knowledgeable.
“What we are trying to do is to go back to the historical heritage of Food Lion, because we know this is what made it a very compelling strategy in the past.”
In addition, Delhaize rolled out a low-tier new private-label line this year — My Essentials — that is part of a plan to increase private-label penetration to 35% of sales by 2013.
“That would position us as one of the leaders in the industry, which is where we want to be,” Beckers said.
The My Essentials line will include some 550 items when it is fully rolled out.
The company is also focused on new-unit growth, with the more aggressive rollout of the Bottom Dollar Food discount banner in the U.S. and the pending acquisition of the Delta Maxi chain in Serbia.
“One of our goals is to get a better balance of growth on both sides of the Atlantic,” Beckers said.
The Delta Maxi acquisition would give Delhaize a presence in five new countries in Southeastern Europe, in addition to the two where it already operates, and a No. 1 share in the region, which is home to 55 million people.
While sales have been basically flat in the U.S., where the company operates nearly 1,700 stores generating about 70% of the company's total revenues, Delhaize has enjoyed strong sales in both its home market of Belgium, and even in Greece, with its severe financial crisis and high unemployment.
Beckers said he is optimistic about the company's future under a more unified structure, however.
“Implementing one common set of values and one vision across all banners, both sides of the Atlantic, having 140,000-plus associates living and behaving every day with the same corporate and professional values, has been an incredible boost to the group culture,” he said.