Food Lion 2008 Annual Report Download - page 25
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Opportunities
Throughout the year, our operating
companies have continued to identify cost
saving opportunities in a wide range of areas
including our stores, the supply chain and
support services. The Group realized cost
savings of EUR 60 million in 2008.
In Belgium, for instance, our operations are
delivering the results of their “Excel 2008-
2010” project at a brisk pace. The project
is a three-year plan to increase sales, reduce
costs and increase efficiencies. Major cost
savings were realized in 2008 through
standardization of operating procedures
and investments in tools and processes,
mixed transportation, computer assisted
ordering, process improvements and service
contract renegotiations, new technologies
and infrastructure. Improvements in store
efficiency have enabled Delhaize Belgium
to offset the negative impact of national
wage inflation. Additionally, the plan aims
at stimulating an overall cost awareness
throughout the Belgian organization.
Another important cost-savings opportunity
throughout our Group lies in the reduction of
energy use, which is especially beneficial in
times of high energy prices. Energy accounts
for up to 10% of our stores’ and distribution
centers’ operating costs. At the end of 2008,
725 Food Lion stores had earned the
Energy
Star
label accounting for more than half of all
Energy Star
grocery stores in the U.S.
Energy
Star
stores use 35% less energy than the
average grocery store and thus help to offset
the impact of increasing energy prices.
Through Food Lion’s long-standing commit-
ment to energy conservation, its power
consumption since 2000 has been reduced
by 29.4%, or 2.5 trillion BTUs, the equivalent
of powering about 480 stores annually.
Before the end of 2009, 100 additional Food
Lion stores will earn an
Energy Star
.
At Delhaize Belgium, several projects were
implemented in the stores to realize energy
savings through more efficient cooling and
heating systems, new technologies and
logistics. At the end of 2008, freezers with
closed doors were installed in almost all
the stores. Delhaize Belgium is targeting to
reduce its energy consumption by 35% by
2020.
In conjunction with its Cor porate Responsibility
vision, the Group developed an inventory
and status of current green IT initiatives
across our operating companies. Our
operating companies made considerable
progress in this area. For example, through
server virtualization, which consists of a
drastic reduction in the number of servers,
we decreased energy use and data center
space requirements.
Delhaize Group is committed to further
improve the leanness of the structure of
our Company and to free up resources to
invest in our development. Our cost-savings
initiatives will continue to be built around
increased store, supply chain and support
service efficiency. To support revenue
growth, profitability and cash flows in 2009,
Delhaize Group plans EUR 100 million cost
reductions and EUR 50 million working
capital improvements.
Cost Management
Improving cost efficiency in a high-volume and low-margin industry
such as food retail is an important driver of value creation. Costs that are
taken out of the business can be invested in price reductions and other
sales-building initiatives. Thus, a virtuous cycle of growth is created.
29.4%
savings in power
consumption at Food Lion
since 2000
or 2.5 trillion BTUs,
the equivalent of
powering about
480 stores annually.
Delhaize Group Our Strategy
Our Activities in 2008
Corporate Governance
Risk Factors
Financial Statements
Shareholder Information
at a Glance
> Generate Profitable
Revenue Growth
> Pursue Best-in-Class
Execution
> Operate as a Responsible
Corporate Citizen