DELHAIZE CLOSING DOORS TO VILLAGE MARKET

ELLIOT ZWIEBACH

SALISBURY, N.C. -- Delhaize America here said last week it will close its two-unit upscale experiment, Village Market, as it moves ahead with the integration of Hannaford Bros. Markets.

The company said it will close the Village Market units in Virginia Beach, Va., and Hilton Head, S.C., next month because of underperformance. The company already disclosed last month it would close 13 Save 'n Pack warehouse stores in Florida and convert five others to the Kash 'n Karry banner.

A spokesman told SN last week the company has no plans to close any other locations, except for a single Food Lion store in Myrtle Beach, S.C.

In other developments:

Delhaize said it will use a Hannaford distribution center in Butner, N.C., as a break-pack facility for health and beauty care items.

It declined to discuss its plans for nine former Hannaford stores in Charlotte, N.C., that have been closed since last June, amid speculation the stores will be sold to one or more competing operators.

Delhaize said it is closing the two Village Market units on Nov. 4 because they did not meet the company's performance standards.

According to a spokesman, "Delhaize undertook a strategic review of its total store operations during the third quarter (which ended Sept. 9) to identify any business units that did not meet long-term performance expectations. As a result, the company has elected to dedicate its resources to growing its three primary store banners -- Food Lion, Kash 'n Karry and Hannaford."

The 17,000-square-foot Village Market in Virginia Beach will close just two weeks short of its one-year anniversary on Nov. 17. A new Food Lion is scheduled to open nearby on Nov. 15.

The Hilton Head location, a 29,000-square-foot store that was built in 1990 as a Food Lion and converted to a Village Market last February, will be converted back to a Food Lion next month.

Local observers said the Village Market format could not provide the necessary array of products and services to keep it competitive with nearby competitors.

The store in Virginia Beach was competing with Harris Teeter and Farm Fresh, plus another upscale independent; another competitor -- Guiliano's Fresh Market and Restaurant, an upscale store opened by Michael E. Julian, former head of Farm Fresh, Norfolk, Va., and more recently of Jitney Jungle Stores of America, Jackson, Miss. -- closed earlier this month, less than two weeks after opening.

Besides shutting down the two upscale units, Delhaize also said, as previously disclosed, it will close its Save 'n Pack warehouse division in Florida. Thirteen of those stores are in the process of being shut down, while the other five are being converted to the Kash 'n Karry banner, a spokesman told SN.

Delhaize completed its acquisition of Hannaford Bros., Scarborough, Maine, in late July, after Hannaford agreed to sell or close 51 units in the Southeast, including nine stores in Charlotte.

Since the Charlotte-area stores closed last June, they have been a source of rampant speculation among competitors regarding who will take them over. However, a spokeswoman for Hannaford, which is still responsible for those sites, told SN Hannaford does not comment on its real-estate activities.

She said the nine stores range in size from 40,000 square feet to 63,200 square feet.

Delhaize said last week it will convert the 460,000-square-foot former Hannaford distribution center in Butner to a break-pack facility for health and beauty care items, servicing all Food Lion and Kash 'n Karry stores.

The warehouse, which is expected to reopen during the second quarter of 2001, will consolidate operations from six Food Lion case-pick facilities, the company said. Employees whose functions are transferred to Butner will be offered other positions at the distribution centers at which they work, the company added.