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Organizing its customer base into a number of individual “clusters” with specific characteristics is at the heart of Food Lion’s strategy that has seen creation of the chain’s new Bloom and Bottom Dollar banners to attract both upscale and price-conscious customers, the company’s chief operating officer, Cathy Green, told a snack industry conference last week.
“The days of same, same, same have become more dynamic and more complex,” Green told the Snack Food Association’s Management Workshop in Charlotte, N.C., Sept. 23.
Bloom, with its 38,000-square-foot layouts, is designed to appeal the “affluent bunch” cluster of customers, while the 19,000-square-foot Bottom Dollar stores are geared to the “Stretching Every Dollar” group. Altogether, there are seven clusters organized according to customer needs and “sliced” based on demographics, Green said. Each, along with Food Lion stores and Harvey’s, a Georgia-based chain of 45 stores recently purchased by Food Lion, have their own specific brand positioning, product assortments and levels of customer service, she said.
“Even training of employees depends on the cluster,” Green explained.
For example, Bloom is seen as “savvy, fun, optimistic,” while Food Lion’s characteristics are “neighborly, practical, dependable,” and Bottom Dollar’s is focused on “price with energy.” At Bottom Dollar, she said, “it’s all about saving money and having fun doing it.” Pricing is specifically designed to be 5 percent below that of Walmart in a “soft discount” format. At Harvey’s, which has grown to 70 stores, as some Food Lion units in southern Georgia and Florida have been converted, the focus is on being a local, neighborly market.
“We are going through all of our stores to redo them according to the clusters,” she said. “We feel very, very bullish about what this will do for us in the future, reducing SKUs and making the stores very efficient.”
Broadening the company’s approach beyond the virtually identical footprint that had been common to every Food Lion store has enabled the company to attract a broad spectrum of consumers and has proved to be successful despite the current economic climate.
Green pointed out that the foreclosure rate in Food Lion’s trading areas in the southeastern United States stands at 39 percent. “One in every four homes in Florida is under foreclosure,” she said, “so what consumers are demanding from us is unprecedented.” Likewise, the combination of unemployment and underemployment is higher in many of those states than in the United States as a whole, which stands at 13.7 percent. South Carolina’s combined rate is 16.8 percent.
All of this is forcing consumers to economize to make their food shopping dollars go further, resulting in a marked increase in private label sales at Food Lion. “Private label is growing like crazy,” Green said, “so it’s now a point of strength for us.”
To plan for the future, Green said Food Lion executives began with what they hope to achieve by 2018 and then mapped back to the present with milestones along the way. “That informs our three-year plan and budgeting for the year,” she said.
But Green acknowledged that massive changes could be expected in the economy and among consumers during that 10-year period. To help with its planning, the company retained the Institute for the Future to help outline the anticipated major trends. Some of those characteristics, she said, will include “deep personalization -- an attitude of ‘me, me, me’”; a desire for increased sustainability; and health “insecurity.”
“When the day is done, we are going to be the trusted agent around all of these concerns,” she said. “We want to be the solution provider for every stage of your life, and we believe that on a macro level, this [approach] will help us get there. We have a purpose: profits will follow.”
In response to a question, Green said Food Lion will “dense up where we’re not dense,” perhaps in Tennessee and moving westward.
Green told snack food sales and marketing and operations executives attending the conference that her 1,300-store chain wants to collaborate with suppliers to help boost sales and profits. She invited them to offer “innovative selling ideas” directed at specific needs and opportunities, such as encouraging consumers to use Food Lion for “pantry-packing” shopping trips.
Green emphasized the importance of “leveraging our vendor pool and collaborative insights to drive our mutual businesses.” She urged trading partners to “deploy your research and analytical capability against our data to add to our businesses.” In fact, she added, “the days of hoarding information are over.”
She said the company was working hard on “assortment renewal” for each of its banners. “We need to get it right,” she said, “and your partnership will be helpful.”