JDH Capital : News
FOOD LION'S FACE-LIFT COMING TO HAMPTON ROADS
12 Feb 2007
By CAROLYN SHAPIRO, The Virginian-Pilot-
FREDERICKSBURG –– In the bakery area of a Bloom store, lush cakes perch on elegant pedestals in a display case more suited to a French patisserie than a U.S. supermarket.
Bloom employees bake the cakes daily, giving them names such as Chocolate Avalanche and Strawberry Sensation. The store’s bakery also constructs cookies, breads and its signature Bloomberry muffins, some topped with icing and a dollop of Maine wild blueberry sauce.
Bloom’s produce area boasts more than 37 packaged herbs and 8 feet of organic fruits and vegetables. A “Flavors of the World” display holds such items as sunchokes and boniato root.
All this, from Food Lion?
Food Lion LLC, based in Salisbury, N.C., is reinventing itself as its growth in many markets has stagnated. In other regions – and soon in Hampton Roads – the grocery chain has overhauled its stores and introduced two new supermarket concepts, Bloom and Bottom Dollar.
Where Bloom edges the quality of products and service up a notch, Bottom Dollar undercuts Food Lion’s longtime claim on low grocery prices. Its no-frills landscape relies on large signs with bold numbers – 33 cents, next to boxes of macaroni and cheese – and shipping palettes dropped onto the sales floor to spotlight bargains such as cans of soup priced at 50 cents each.
“We need to appeal to consumers on different levels, and there are different needs out there and different shopping preferences,” said Food Lion spokeswoman Karen Peterson . “You need to change to meet the changing needs of consumers.”
Both new store concepts arrived in Fredericksburg and other communities around Washington last year. Owned by Belgian food retailer Delhaize Group, Food Lion also revamped stores in three North Carolina markets – Charlotte, Raleigh and Greensboro.
Amy and Eric Waldron, Fredericksburg residents who frequented a nearby Food Lion, now do much of their shopping at the Bloom that replaced it in late October. “Everything’s cleaner, nicer, fresher,” said Amy Waldron, 39, applauding the “way better produce section.”
In Hampton Roads, where Food Lion boasts the largest market share of all food retailers with about 44 percent, it is reviewing its 90 or so stores to decide which concept to put where. It could build the new stores from the ground up or convert existing Food Lions.
Stores that remain Food Lion will get face-lifts that could include new floors and lighting and the addition of a Nature’s Place organic and health food section, Peterson said. The company has provided no timetable for the changes locally, part of its overall plans in the 11 Southeast and mid-Atlantic states where it operates.
Call it the Whole Foods effect, spurred by the growth and popularity of Whole Foods Market Inc. and its emphasis on organic products, prepared foods and specialty items. Consumers are growing more interested in healthful eating and better food choices, said Mark Husson, a retail analyst for HSBC Securities (USA) Inc. in New York.
Even discount retailers today want to sell good-quality produce, meat and organic products, he said. “It’s consumer-driven.”
Husson called this trend “Good Foods’ Retailing” in a report released last month. He defined “good foods” as fresh, premium, prepared and organic.
“The mass market is moving from 'easy’ foods to 'good’ foods, which will be good for the physical health on the U.S. consumer, as well as for food retailers’ profits,” Husson wrote in the report.
Heavy competition has forced retailers to differentiate their brands. In Hampton Roads, No. 2 Farm Fresh has encroached on Food Lion’s market share and is refurbishing many of its stores, adding organic sections and expanding its selection of spices and Italian foods. Farm Fresh, the Virginia Beach-based subsidiary of Supervalu Inc., and Harris Teeter, a smaller local competitor based in North Carolina and popular with upscale shoppers, are both building new stores in the region.
Because Wal-Mart Stores Inc. and its Supercenters have gone head to head with traditional supermarkets on price, stealing sales in the process, grocers that banked on low-cost appeal have had to rethink their strategies. Some favor the Bottom Dollar idea: discounted goods with a limited selection in smaller spaces, contrasting the time-consuming size of a giant supercenter or price club such as Costco.
“It’s essentially the Wal-Mart shopper who doesn’t want to go to Wal-Mart,” said Todd Hultquist, an independent food industry consultant based in Washington.
Other chains have embraced an upscale approach such as Bloom, with better quality products and smiling service. Shoppers can “pick a few things out for dinner and walk out in four minutes,” Husson said.
The Bloom strategy emphasizes the “shopping experience” and convenience, said Don Wylie, Bloom’s district manager in Fredericksburg. Each store has a “taste ambassador” who chooses samples, hosts wine tastings, gives cooking tips and guides customers through the Bloom experience.
Interactive electronic kiosks stand throughout the store under signs that read, “Getting information is a breeze.” Shoppers can use the touch screens to match a wine with a meal, print out Bloom recipes or find a product by pulling up a multicolored map of the store. The grocery aisles set off “signature” categories on rounded shelves, highlighting an extensive selection – of olive oils or crackers, for example – that Bloom say s no other store can match.
For convenience, Bloom added designated parking spaces for 20-minute shoppers. The store places nonfood products on one side of the store and food on the other, recognizing that shoppers make multiple trips each week for meals but only one trip every couple of weeks for such things as toilet paper and laundry detergent.
“Anybody can sell organics,” said Ken Lyons, manager of a Bloom in Fredericksburg. “The environment you set for the customers and the customer experience – that’s the key to this.”
On the other end of the spectrum, Bottom Dollar has an abbreviated array of goods, with a full line of groceries and produce but fewer brands in each category. The limited variety allows Bottom Dollar to put more of each item on the shelf, reducing its restocking time and labor costs.
It also can carve out a few cents by using inexpensive, industrial-style shelving and letting customers bag their own groceries. The store provides free boxes, its own mesh reusable bags for $1 each or heavy-duty plastic bags for a nickel apiece.
If a shopper brings proof of a better price elsewhere, Bottom Dollar pledges to beat it by a penny, said Kimberly Blackburn, Bottom Dollar’s spokeswoman. The store also offers a few low-cost extras, such as a bin of $1 DVD movies, mostly older titles.
George Swendle, a 67-year-old Fredericksburg resident, dug through the discount DVDs in late January at a Bottom Dollar near his home. He praised the store’s prices: “I come here first, and if they don’t have what I want, then I go over to Blooms or Wal-Mart.”
Food Lion took great pains to differentiate its new brands. Bottom Dollar carries a mere 6,000 or so products, while Food Lion averages 28,000 items and Bloom expands to as many as 35,000, said Food Lion’s Peterson. Both new concepts made aisles wider and shelves lower, providing a more open feel and greater ease for the average shopper, standing 5 feet, 4 inches, Wylie said.
Bloom’s logo uses a small “b” and a soft blue hue. Bottom Dollar, also with lowercase letters, shoots for a playful atmosphere, with neon green and orange for its signs and T-shirts.
“Lighthearted, energetic and pragmatic is what we are,” said Pete Duncan, Bottom Dollar’s district manager in Fredericksburg.
Bloom has a full-service fresh-seafood department and butcher. Food Lion sells only pre-packaged seafood and meats, though employees will cut them on request.
Bottom Dollar has no deli or bakery but a smattering of popular items in those categories. Both Food Lion and Bloom carry pre-cooked rotisserie chickens, but Bloom’s birds are 5 pounds and better quality, compared with Food Lion’s 3-pounders, Wylie said.
Bloom carries its own private label; the Food Lion name appears nowhere. Bottom Dollar, unabashedly, sells Food Lion’s branded products at a discount. A 2-quart bottle of Food Lion apple juice costs 96 cents at Bottom Dollar, $1.39 at Food Lion.
Food Lion ultimately aims for all three concepts to appeal in some way to every type of customer, said Bottom Dollar’s Blackburn. Someone might take advantage of the low price on juice at Bottom Dollar, visit Food Lion for a particular brand of pasta sauce not found at the discount store and stop at Bloom for an exotic cheese or aged balsamic vinegar.
“You can’t squeeze everything into one store,” Blackburn said. “You can’t be everything to all people.”
