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DELHAIZE GROUP / ANNUAL REPORT 2005 19
15.4
15.9
16.6
2003
2004
2005
NET SALES AND
OTHER REVENUES
(IN BILLIONS OF USD)
OUTLOOK FOR 2006
Enter
Greenville-
Spartanburg,
South Carolina
(Food Lion)
Renew
Food Lion’s
Washington,
DC market
Convert Tampa/St.
Petersburg market
from Kash n’ Karry
into Sweetbay
Supermarkets
Accelerate store
openings at
Hannaford
1,515
1,523
1,537
2003
2004
2005
NUMBER OF STORES
offering was increased by about 60% , including interna-
tional fruits and vegetables and expanded lines of tropical
and freshly cut fruit.
In the Fall of 2005 , Food Lion opened three pilot stores of
the deep discount concept, ”Bottom Dollar.” This new con-
cept is positioned as a full-range discount grocer, carrying
approximately 6,500 products, as com pared to approxi-
m ately 1,00 0 items in a typical discount grocery store. The
store sells national and private label products and carries
a full line of meat and packaged deli/ bakery products.
Customer reacted positively to the new concept.
In December, Food Lion also opened a new 35,000
square-foot prototype store, giving special attention to the
fresh departm ents. Grocery aisles are wider and shelves
a little lower to make shopping easier. An exposed ceiling
gives the entire store an open, airy feel. The features of this
prototype will be used in future store developm ents.
In order to better serve its custom ers, Food Lion has
analyzed its customer base, resulting in the identifi ca-
tion of eight distinctive customer segments with different
shopping behavior. This segmentation work will support
decisions in areas such as store developm ent, concept
creation, m erchandising and m arketing. The segmenta-
tion analysis will be a key elem ent in deciding which of
the three brands, Food Lion, Bloom or Bottom Dollar, to
develop in a given location.
Food Lion introduced two new exclusive private label
lines in 2005 , a new exclusive line of fresh beef called
Butcher’s Brand Premium Beef and a wine brand called
Braidenwood Estates. The Braidenwood Estates wines are
m ade exclusively for Food Lion and offered fi ve varieties
at year-end.
Since the second quarter, Food Lion successfully rein-
forced its price, prom otion and m arketing activity in order
to confi rm its low price leadership am ongst superm arkets
in the Southeastern U.S.
Effi ciency
Food Lion continued efforts to im prove its supply chain.
Starting in Septem ber of 200 5, Food Lion began rolling out
a new Item Lifecycle Managem ent ( ILM) system , which
m anages item and vendor inform ation on one single
platform . The developm ent of a com prehensive item and
vendor database, coupled with new workfl ow capabilities,
will allow for greater functionality and processing effi cien-
cies. Further benefi ts will include the ability to easily accept
and approve inform ation from vendors and/ or brokers.
Food Lion‘s standard practices for in-store activities were
fi ne-tuned and form ed the subject of intensive training
and comm unication efforts. Its in-store labor manage-
m ent system was refi ned and aligned with the standard
practices.
The Com pany also continued to focus on energy effi -
ciency, an im portant cost factor in light of rising energy
prices. In 20 05, Food Lion had its 4 00 th store labeled as
an Energy Star store, an offi cial recognition of its energy
effi ciency. Since 20 00 , Food Lion reduced its energy use
by m ore than 25 % .
HARVEYS
Harveys stores, mainly located in Central and South
Georgia, are known for m erchandise that m eets the local
needs of the rural comm unities in which they operate. In
order to benefi t further from this strong local nam e, im age
and customer loyalty, Delhaize Group converted 12 addi-
tional Food Lion stores in this area to the Harveys brand,
bringing Harveys’ total store network to 67 at the end of
the year.
In Novem ber of 200 5 , m anagem ent decided to integrate
the Harveys supply chain and som e of its corporate sup-
port system s into the Food Lion organization. As a conse-
quence, it was decided to close Harveys’ distribution center
in Nashville, Georgia. The Harveys stores will be supplied
by Food Lion distribution centers in South Carolina and
Florida. This decision will allow the Com pany to enhance
effi ciency by realizing im portant synergies with Food Lion.
Added 19 Sweetbay
stores through
conversions and
openings