Food Lion CEO Touts Multibrand Strategy

JOHN KAROLEFSKI

PHILADELPHIA — Food Lion has remodeled or rebranded a quarter of its 1,300 supermarkets in a chainwide program scheduled to end in 2009 or 2010.

About 145 stores — most of them in the Norfolk, Va., and Myrtle Beach, S.C., markets — will be worked on this year, according to Rick Anicetti, president and chief executive officer of the Salisbury, N.C.-based retailer, which operates in 11 Southeast and Mid-Atlantic states.

This “market and store renewal” initiative, he said, stems from the chain's focus on eight consumer segments that it has identified and used to group its stores into 13 clusters. The retailer operates five banners: Food Lion, Bloom, Harveys, Bottom Dollar Food and Reid's.

“It's all about serving consumers based on their individual needs,” Anicetti said, explaining the chain's strategy of consumer segmentation and store clustering. He spoke at the first annual Food Industry Summit, sponsored by St. Joseph's University here last week.

Anicetti described Food Lion's process of market and store renewal as “throwing a marketing ring around stores, renewing them completely and then reintroducing ourselves to the consumer.” Over the last three years, the chain has focused on three markets in North Carolina: Raleigh, Charlotte and Greensboro.

“Those were all about renewing Food Lion stores as Food Lion,” he said. “In 2006, we did our first multibranded approach. We took 80 stores in the greater Washington, D.C., area [and] converted 40 of them to Bloom, 26 to renewed Food Lions and 14 to Bottom Dollar.”

Anicetti explained that the chain in the past focused solely on profit and efficiency, and not enough on consumers. It believed that “one size fits all” in terms of operating stores to serve shoppers.

“Food Lion for years was about sameness: the same price, same assortment, same size store, same way of remodeling. It was about sameness everywhere. In the '90s, we absolutely hit a brick wall,” he said, and needed to reinvent the company to serve consumers better.

According to Anicetti, Food Lion runs its business today by looking through a lens of consumer insights. It has identified eight segments of distinct consumer behavior that collectively account for shoppers in the markets that Food Lion serves. They include Savvy Singles, Babies and Bills, Country Living, Comfortable Carpooling, Getting By, DINKS (Dual-Income No Kids), Wealthy Elites and Golden Years.

“These segments informed our store clustering,” he said. “We grouped look-alike stores into 13 clusters across our 1,300 stores.”

Anicetti said operating a chain based on clusters has implications for format, design, assortments, fixtures, promotional opportunities and even employment.

“We discovered through segmentation work that we are positioned in many communities where consumers don't find a compelling desire to shop our stores,” he explained. “As we began to look at the opportunities of deploying multiple brands, we created them over time with very sharp edges. We have brand strategy, brand personality and brand attributes in a way that really gives the organization a means to make decisions differently for each of these particular brands, even if they exist in the same marketplace. Again, it's all about serving consumers based on their individual needs.”

For example, he listed brand attributes of some of his banners — Food Lion: neighborly, practical and dependable, and Bloom: straightforward, thoughtful and optimistic.