Food Lion 2010 Annual Report Download - page 8

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Delhaize Group indeed has many initiatives in the pipeline.
This surely doesn’t make things easier?
Pierre-Olivier Beckers – The importance of simplicity is another
key element of success. It is important to have simple structures
that make fast and efficient decision making possible. In 2010, we
already worked on that. I already mentioned the efforts done in
the U.S. with the creation of Delhaize America but across the entire
group we also worked on other cost saving initiatives. Through
regional and local synergies we will succeed in achieving our target
of EUR 500 million gross annual cost savings by the end of 2012.
Simplification of the organization’s structures and processes will
also put us in a better position to integrate future acquisitions.
In the New Game Plan these cost savings will fund
future growth?
Pierre-Olivier Beckers – The realized cost savings have and will
continue to fuel the many sales building initiatives such as price
investments. Last year we reduced prices at all our banners.
A better price position and an improved price perception are
leading to more customer loyalty. This is the virtuous cycle of growth
we want for our business.
Georges Jacobs – Talking about growth, let me mention that in
2010, despite the challenging times, we were able to increase our
network with 68 stores bringing the total to 2 800 stores. As we
announced on many occasions before, one of the ways we want to
accelerate our sales is by putting more emphasis on new formats
and new markets. That is how we ended up opening 16 Bottom
Dollar Food stores in the U.S. and 21 new stores in Romania, of
which 10 were Red Market.
Pierre-Olivier Beckers – And we will step up this effort in 2011. Our
target is to open between 120 and 130 new stores. And once again
the emphasis of the new openings will be on the new formats
like Bottom Dollar Food in the U.S., Red Market in Europe, as well
as openings in our newer markets like Greece, Romania and
Indonesia. The confidence we have in our plans is the basis for a
strong investment program of approximately EUR 900 million in
2011 to open new stores, remodel others and continue to upgrade
our IT systems and logistics infrastructure.
Building sales in existing stores and more new store openings
leading to higher volumes. A clear growth path. But what about
your assortment in those stores?
Pierre-Olivier Beckers – There are two important elements that
have to be monitored in achieving value leadership. Price as
mentioned earlier is without any doubt an important one, but the
quality and variety of the product offering is equally as important.
Quality and price should reinforce each other and lead eventually
to a unique shopping experience. Knowing that the consumer has
less money to spend, he will ask more value for money. “More
value for money” is a trend that we believe is here to stay; it will not
disappear as we recover from the crisis. With our stronger focus on
everyday low prices, we convince people that they get more value
for money. Our investments in private brand should be seen in that
perspective. Our private brands are indeed high quality products
that live up to the high expectations of our customers, but at prices
that are much lower than the national brands. We optimized our
assortment, making it easier for the customer to choose and for
us to manage, but without limiting the choice by offering products
from our own selection.
Georges Jacobs – It‘s an evolution that customers clearly
appreciate. The share of private brand products in their basket
becomes more and more important. The growth figures are most
apparent at Food Lion, Hannaford and Alfa Beta. In Belgium, private
brand penetration already is on a very high level, but even so, we
see that there is still room for more.
“In 2010 many initiatives were taken
for associate development. Since
we cannot do business for people
without people doing the business
we attach great importance to this
part of our New Game Plan.”