FOOD LION SEEKS TO 'BLOOM' WITH PREPARED-FOOD STORE 2004-05-10 (1)

MARK HAMSTRA

SALISBURY, N.C. -- Food Lion here last week said it would debut a new retail banner this month that will focus on prepared foods and a "simplified shopping experience."

The first of the stores, to be called "Bloom, a Food Lion Market," is set for a May 26 debut in Charlotte, N.C., where the chain is also planning a marketwide remodeling effort later this year. The first Bloom will be a newly constructed store measuring 38,000 square feet. The four additional test sites, all planned for the Charlotte market, will be conversions of existing Food Lion locations, a spokesman for the chain told SN.

"The look of Bloom inside will be unlike anything that is out there right now," said Jeff Lowrance, the Food Lion spokesman. "It will be unlike Food Lion or any other store operated by [Food Lion parent company] Delhaize Group. From the time the customer walks in the door, there will be technologies in place to help customers find products, price products and get information about how to prepare items, and things to ease the checkout process."

The tag line supporting the Bloom banner will be "Thought for Food," the company said.

Lowrance declined to provide details about the product mix, although he did say that Bloom would not have chefs on the premises but would instead focus on take-and-heat items and hot, prepared meals through the chain's partnership with Boston Market, Golden, Colo.

Lowrance also said the Bloom stores would carry traditional groceries in addition to prepared foods and would offer other services "to make it more of a one-stop shopping destination." He said Food Lion envisions the Bloom stores co-existing in the same markets with Food Lion as complementary concepts meeting different consumer needs.

The new format, which Food Lion had previously disclosed it was developing, is the result of a two-year initiative that involved input from throughout the Delhaize organization.

Jon Hauptman, vice president, Willard Bishop Consulting, Barrington, Ill, said the Bloom initiative makes sense given the findings from a recent Food Marketing Institute report indicating that consumers are increasingly looking to supermarkets as a source for prepared meals to eat at home.

"Food retailers are feeling increased pressure from alternative formats in the center of the store," he said. "One way to respond is through uniquely and expertly selling the periphery, and it appears the Bloom concept will take that to the next level."

Patrick Roquas, analyst, Kempen Securities, Amsterdam, said he was encouraged by the company's commitment to testing new formats.

In a conference call with analysts regarding financial results for the first quarter, executives from Delhaize Group, Brussels, Belgium, declined to discuss the amount of the investment both in Bloom and in the previously announced planned conversion of Kash n' Karry to the Sweetbay Supermarkets format.

Rick Anicetti, chief executive officer, Food Lion, said during the call that the company was pleased with the results of the marketwide remodeling of the Raleigh market last year. He said comparable-store sales gains have been double those of the rest of the chain.

Comp-store sales for all of Delhaize America were up 2.5% in the first quarter, the company said. Total sales grew by 5% for the first quarter, to $3.87 billion, while operating profit slid 4.1%, to $182 million, compared with the year-ago period. The operating margin was 4.7%, vs. 5.2% a year ago.

The company attributed the decline in operating margin to higher advertising and heating-fuel expenses at Hannaford Bros., increased shrink at Food Lion and an unfavorable comparison with last year's first quarter, when the company reduced expenses at Food Lion but had not yet begun an aggressive price-oriented campaign.

"Generally, the impression was that the gross margin decline was specific to the quarter," said Roquas.