Multi-Banner Strategy: Food Lion adds planning and pricing to reach segmented consumer base

Meeting local consumers' needs is the primary driver behind Food Lion's multi-banner strategy to improve merchandising and pricing. Operating grocery stores under five different banners in 11 states, Food Lion is increasing its presence within its current footprint by opening 30 to 35 new stores in 2006.

The company currently operates more than 1,200 stores under the names Food Lion, Bloom, Bottom Dollar Food, Harveys and Reid's, in the Southeast and Mid-Atlantic states. Food Lion is part of the Delhaize America group which also includes the Hannaford Bros., Kash n' Karry and Sweetbay chains, combining to be the sixth largest grocery chain in the U.S., with $16.6 billion in sales and more than 1,500 total outlets.

Food Lion currently is implementing Galleria's assortment and space planning solutions and DemandTec's pricing and promotion products. "These tools allow us to identify and address consumers' shopping patterns and behavior, helping us to meet our overall goal of having the right product at the right store at the right time," says Dennis Post, vice president of IT, Food Lion.
By implementing these programs across all five banners, Food Lion is taking advantage
of economies of scale, in an effort to achieve its goals while holding the line on costs. "As
a result of this program, we will still continue to have a significant cost advantage in the market, but we expect to see an increase in sales, items per basket and customer count as we complete our rollout," Post notes.

Galleria's Automated Micro Assortment Planner and Automated Micro Space Planner will deliver customer-centric assortments, communicated through customized, automated planograms. "The goal of our multi-banner and customer segmentation strategy is to significantly increase customer satisfaction levels with the Food Lion brands," adds Geoff Waldau, vice president of merchandising services. "To accomplish this, we needed a more granular, synchronized assortment and space planning solution that would enable us to effectively support the resulting business changes."
Food Lion selected Galleria in January of 2006, after a comprehensive research process. "We required a full proof of concept and rigidly evaluated Galleria against its competitors," says Post. "We selected Galleria based on the company's proven experience and robustness and scalability of its technology solutions for automated assortment and space planning."

On-Demand Merchandising

To get a handle on pricing and promotion strategies, Food Lion and other banners that are part of the Delhaize America group have chosen DemandTec Price, Promotion and Markdown software. DemandTec provides its merchandising software as an on-demand service, designed to enable retailers to gain the software's complete functionality while minimizing the up-front investment.
"We're delighted to partner with DemandTec," says Waldau. "DemandTec's innovation and domain expertise will enable us to continually reinforce with our customer our reputation for exceptional value and superior customer service."

Coordinating Business Strategies

To expedite the process of coordinating new systems with business strategy, Food Lion selected Infosys to serve as a systems integrator. "Infosys is providing business consulting and they also are helping to develop interfaces to these systems as well as implementation of downstream data flows," explains Post. The company has been working with Infosys on various projects since 2002. "Infosys is very skilled in understanding our business and has an excellent track record with us," notes Post. "This trait enables us to implement solutions, which allow us to deal with today's issues while moving forward to tomorrow's successes."

Utilizing consulting help also allows the retailer to avoid adding to its core staff. "We have created new processes and systems to support multiple strategies leveraging our current core team," notes Post. "We are able to differentiate across multiple banners while not losing our cost advantages." In addition, Food Lion enlisted consulting services from both Galleria and DemandTec.
Infosys also is helping Food Lion create a central depository for item and vendor information. The Web-based system enables the retailer to share information with its vendor partners. "This database enables a paperless flow of information," says Post. The database is a custom in-house project and implementation began approximately 18 months ago, following a process of project and workflow definition.

Streamlining Workflow

Food Lion selected the Reflexis store execution management suite in February of 2006. "Streamlining workflow will minimize the volume of inefficient e-mail and help our 73,000 associates focus on doing the right thing at the right time," explains Mark Messier, vice president of retail services. Using the Reflexis products, Food Lion expects to facilitate better planning of store activities and improved scheduling of store employees. These benefits can produce higher sales, reduced labor costs and a more consistent customer experience.
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