Pricing, Discount Expansion in 'New Game Plan' for Delhaize

JON SPRINGER

SALISBURY, Md. — Food Lion will double the number of its Bottom Dollar discount stores and push pricing at its flagship banner closer to that of Wal-Mart in 2010 as part of a "New Game Plan" announced Thursday by officials of its Belgium-based parent, Delhaize Group.

Speaking at Delhaize's annual investor conference in Greece, Rick Anicetti, chief executive officer of Delhaize's Food Lion chain, said the retailer would begin a multi-year investment in pricing designed to narrow its gap with Wal-Mart, rather than position itself between conventional competitors and discounters as Food Lion has traditionally done. This investment, which would begin in the fiscal first quarter of 2010, is to be funded almost entirely by internal cost reductions, he said.

Bottom Dollar, the discount banner founded by Food Lion in 2006 and currently operating 28 stores, plans to nearly double its size in fiscal 2010 and expand to new markets, Anicetti added. Bottom Dollar currently operates stores in Maryland, Virginia and North Carolina. The expansion is part of a companywide plan to use discount banners to accelerate Delhaize's organic store growth. Delhaize plans 250 new discount stores to open in three years between its Bottom Dollar banner in the U.S. and Red Market discount chain in Europe.

Pierre-Olivier Beckers, CEO of Delhaize Group, said the new strategic plan would accelerate growth by narrowing the pricing gap with leading price operators in all of its markets; using discount banners to grow organically; further emphasizing health and wellness; and revamping product assortments around consumer demands. The plan also calls for internal cost reductions of around $450 million over the next three years.

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