Pierre-Olivier Beckers has been fond of saying lately that the Delhaize Group, not unlike George Washington crossing the Delaware, is “in the middle of the river” on its way to the other side.
Thus far, the waters have been choppy, as the challenging economy and other factors led to a U.S. sales decline of 1.2% in the first quarter of 2012.
Delhaize’s journey began in 2010 when the Belgium-based food retailer launched its “New Game Plan,” a sweeping initiative to jump-start dormant sales via price drops while cutting costs through the integration of its Delhaize America division, which includes Food Lion, Hannaford Bros., Sweetbay and Bottom Dollar Food.
When does Beckers, chief executive officer of both Delhaize Group and Delhaize America, expect the company to land safely ashore? He told SN that he is targeting the end of 2014, when “we should get to sustainable revenue growth of 5% to 7%.”
In the U.S., Delhaize has aggressively embarked on a series of moves, notably the revamping of Food Lion, the marked expansion of the Bottom Dollar Food discount chain, and the phasing out of the Bloom banner.
After shuttering 126 Food Lion stores in low-market-share areas, that banner is returning to its “historical legacy of competitive prices” via price cuts, as well as emphasizing other attributes like shopping convenience and strong perishables. By year-end, the program will have encompassed 70% to 80% of the roughly 1,100 Food Lion stores, with the rest to follow in 2013.
Recent results are “slightly ahead of what we saw last year,” Beckers said. “Stores are creating real volume growth, supported by significant increases in the number of transactions and the number of items [purchased].”
As for Bottom Dollar, Delhaize entered Philadelphia last year and Pittsburgh in 2012 with that format, opening 35 and 15 stores, respectively, with plans to create additional store density in those markets, including about 10 more units in 2012. The Bottom Dollar format has evoked “tremendous enthusiasm” among shoppers, translating to repeat business and “building loyalty quickly,” Beckers said, adding, however, that “we need to bring the model to profitability now.”
Bottom Dollar could enter more markets and open “hundreds of stores” during the next five years, he noted.