Delhaize Unveils New Store Brand, Adjusts Food Lion Strategy

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March 15, 2011

Delhaize introduced its new ‘My Essentials’ store brand and announced a revised strategy for Food Lion, the banner hit hardest by the economic downturn, during the company’s fourth quarter conference call with analysts.

‘My Essentials,’ which launched this week at the company’s Sweetbay supermarkets, will include 500 staple grocery items and will debut at Food Lion in the second quarter. The new brand is price competitive to rivals such as Walmart, Aldi and Target, according to reports.

“At all our banners, private brands continue to increase in importance, mainly as a result of continued promotions and assortment innovation,” said Delhaize CEO Pierre-Olivier Beckers. “Private brands are a great way to increase customer loyalty, certainly in these difficult times, and at the same time to support gross profit. In the U.S., private brand sales increased by close to 100 basis points on average.”

Health and nutrition is a key component of ‘My Essentials,’ which are free of trans fats and are low in sodium and sugar. The store brand also has front-of-pack labeling, which will reportedly replace Delhaize’s existing Guiding Stars nutrition rating and labeling system.

Beckers also announced that in 2011 the company is creating a single procurement organization for Delhaize America, which will support all U.S. banners, including Hannaford, Sweetbay, Food Lion, Harvey’s and Bloom. The initiative will streamline “assortment and promotion planning and execution, sourcing and procurement, private brand management and pricing expertise,” Beckers said. “Further improvements in private brand management, product sourcing, value chain analysis and supply chain optimization will accelerate the significant savings achieved during the last quarters, and by the end of 2012.”

On the Food Lion front, Beckers explained that the weak economy and high unemployment in the Southeast U.S. region where the grocery chain operates, forced Food Lion to dramatically reduce prices at the beginning of 2010, which is beginning to yield positive results.

“During this past quarter, Food Lion also launched a series of television ads supporting the new price strategy and referring to Food Lion’s low price heritage,” Beckers said. “In the stores, we started with the installation of coupon kiosks, enabling customers to benefit from tailor-made offers based on past purchases.”

SBD Views: Comments related to the launch of “My Essentials” by CEO Pierre-Olivier Beckers illuminate Delhaize’s strategy and commitment to store brands. It’s interesting to see them putting the organization and infrastructure in place needed to execute against their strategy. I believe this kind of commitment and investment will result in increased store brands share and performance. Delhaize America is on the move with store brands. -- John Failla for Store Brands Decisions

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