Food Lion Refines Customization

MICHAEL GARRY

NEW YORK — Food Lion marketing executives said last week that the company is leveraging sophisticated demand-based applications, as well as collaborating with a growing number of suppliers, in order to offer products and prices best suited to the preferences of shoppers in different locations.

The Salisbury, N.C.-based chain, which has already developed merchandising plans for specific groups of stores, expects to deliver shelf planograms and prices tailored to each of its roughly 1,300 stores operating in the Southeastern U.S and environs.

“We used to have one price zone,” said Lewis Campbell, Food Lion's vice president of merchandising services. “Now we can create, if we want, 1,300 price zones.” In addition, he said, “we expect to have unique planograms in every category in every store. In the past we had one common [set of] planograms.”

Campbell, along with Charles Davis, Food Lion's vice president of strategy and analytics, described the chain's “customer-centric” merchandising approach at the National Retail Federation's 97th Annual Convention & Expo here last week.

They were joined by Craig Hodnett, vice president of category management, Cadbury-Schweppes Americas Beverages, Plano, Texas, who explained how Cadbury has collaborated with Food Lion to develop merchandising strategies tailored to the chain's customer segments and store clusters.

In their collaboration, Food Lion and Cadbury are using price and promotion optimization tools and a trade promotion management network provided by DemandTec, San Carlos, Calif. They are also both employing assortment and space optimization applications marketed by Galleria Retail Technology Solutions, a U.K. software firm with offices in Chicago.

Campbell said Food Lion has applied DemandTec price and promotion applications to about 40 categories over the past 18 months.

Food Lion began applying Galleria's space planning tool to several categories last year and plans a full rollout in 2008, Campbell said. Hodnett said Cadbury was able to use space planning automation to deliver customized beverage planograms to Food Lion for 1,200 stores in two weeks.

Food Lion started building its current merchandising approach, said Davis, by identifying eight major customer segments into which its shoppers could be grouped: DINK (dual income, no kids), comfortably carpooling, country living, getting by, babies and bills, wealthy elites, golden years and savvy singles.

The chain then organized its stores into clusters ranging from 40 to 300 stores that shared similar customer segments and category sales performance.