Food Lion 2003 Annual Report Download - page 25

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1999 2000 2001 2002 20031999 2000 2001 2002 2003
2003 2002 change
Number of stores 728 707 +21
Sales* 3,674.9 3,420.3 +7.4%
Operating margin 4.8% 3.6% -
Operating profit* 177.5 122.5 +44.9%
Net earnings* 131.4 91.9 +43.0%
* in millions of EUR
Value for Money
In 2002, Delhaize Belgium adopted successfully an Everyday
Fair Price position (EDFP). In 2003, under the EDFP strategy,
the shelf prices of approximately 2,750 products were
lowered. At the same time, Delhaize Belgium reviewed its
loyalty card program, reducing the card savings to reinvest
in overall lower shelf prices.
An important component of Delhaize Belgium’s offering
is private label products. On average they are offered at
a 15% lower price than national brands and are a vehicle
for product innovation and added value. To stress the
strategic importance of its private label offering, Delhaize
Belgium started in 2003 to introduce new private label
packaging design for all product categories. In addition, a
large marketing campaign informed customers about the
advantages of Delhaize Belgium’s private label products.
Store Network Expansion
In 2003, Delhaize Belgium grew its store network with three
company-operated supermarkets, including its first store
in Germany, a supermarket in the town center of Aachen.
The remainder of the sales network growth came mainly
from the opening of smaller stores under the Delhaize City,
Delhaize Proxy and Shop n’ Go banners, all three of them
focusing on convenience. These formats respond to the
needs of increasingly time-starved shoppers and reflect
the Company’s dedication to offer customers a solution for
multiple shopping occasions.
Delhaize Belgium also launched the remodeling of its
network of company-operated supermarkets, to be fi nalized
by the end of 2005. In 2003, 25 supermarkets underwent
remodeling. All these stores received a fresh look and
were equipped with the newest concepts, like in-store
deli preparation and the new fi sh workshop, enhancing
transparency towards the customer.
Effi ciency Throughout the Supply Chain
The important expansion of the small stores network
over the last several years required a modification of
the logistics of the organization. In March 2003, Delhaize
Belgium opened a new break-pack distribution center with
a semi-automated picking system. The new system, mainly
shipping slow-moving high-value items, is expected to
improve the efficiency of the distribution center for these
products by 15% in 2004. In 2003, the number of shipping
errors was reduced from 15 to four errors per 10,000
shipments. Additionally, the system allows smaller stores
to order in smaller quantities, thus resulting in lower store
inventory levels.
Number of Stores Sales
(in billions of EUR)
Posted comparable
sales growth of 5.6%
and grew market
share to 25.2%
Opened three
and remodeled
25 company-operated
supermarkets
Opened new break-
pack facility with
semi-automated
picking system
Obtained ISO
certifi cation
for cold chain
Add 25 stores
for a total of 753
Continue three-year
remodeling plan for
all company-operated
supermarkets
Roll out new
inventory
management system
Start building new
distribution center
for fresh products,
operational in 2005
553 615 675 707 728 2.8 3.0 3.2 3.4 3.7
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