Delhaize Group Launches
New 365 Brand In Europe
BY HÉLÈNE DEGRYSE

Delhaize Group is employing large in-store displays-as seen here for its carbonated beverages-to introduce the new 365 Brand of everyday value private label throughout its trading area in Europe.

The new pan-European private label line is being introduced in its 970 stores located in Belgium, Greece, the Czech Republic, Romania, Slovakia, and Luxembourg under a variety of store banners.

In May 2004 Delhaize launched a new low price private label range called "365" with basic products available at an everyday low price and for everyday use.

Historically, Belgium is the home market of Delhaize Group. It is where the company opened the first totally self-service supermarket, Delhaize Le Lion in Europe in 1957.

Today, Delhaize enjoys a strong market position and ranks second in Belgium in terms of sales. There are now 125 Delhaize Le Lion supermarkets in Belgium which all offer customer service and a pleasant shopping environment and feature a huge assortment of high quality products at competitive prices.
The AD Delhaize supermarket format started in 1983 and now includes about 200 stores in Belgium and one in Luxembourg. Most of AD Delhaize stores are open on Sunday. Delhaize Group considers this store format to be its most important growth vehicle today.

In addition, Delhaize Group operates 188 convenience stores under three different names: Proxy, Shop 'n Go and City.

Proxy Delhaize is a convenience store with a large offer of fresh products and private labels.

The Shop 'n Go convenience store is a gas station store with longer operating hours.

The City store is a strategically located neighborhood store which exclusively sells Delhaize private label products.

Delhaize also operates its own online retailing website: www.caddy-home.be at which grocery orders can be placed online for delivery at home. Of course, customers can also place orders to Caddy-Home by phone and by fax.

In addition to all of its food retailing activities, Delhaize also operates 134 Di shops (drugstore and beauty product store) and Tom & Co, (a pet food and accessories store). Both these store formats are number one in their respective sectors in Belgium.

Other European Formats

Delhaize started to expand its store operations into southern and central Europe at the beginning of the 1990s and now the group operates various retail formats in several countries.

Today, Greece is the strongest of these markets for Delhaize Group with 89 supermarkets called Alfa-Beta, 20 convenience shops called Trofo, and 10 cash & carry stores called ENA Cash and Carry.
The focus of the stores in Greece is offering good quality, fresh products and good service for a good price. Delhaize stores are geographically spread and are number two in the country in terms of sales. Delhaize employs 6453 people in 119 stores across the country.

In the Czech Republic, since 1991 Delhaize has operated 94 stores under the name Delvita supermarkets and convenience stores. In 1998, it introduced the Delvita format into Slovakia with 14 supermarkets under that name.

The Delvita stores offer the best quality and service for the best price. The shops are strategically located in various cities of both countries, and Delvita is Prague's number one supermarket chain. Delvita recently increased its assortment of private label products from 100 to 500 products. PL products represented 5% of the total turnover in 2003 compared to 2% a year before. Delvita also introduced new products on those markets such as pre-packaged salads, fresh fruit juices and Italian gourmet products.

Finally, Delhaize runs 15 supermarkets in Romania under the name Mega Image. This store format is number one in Bucharest.

365 Brand

Delhaize Group launched the new 365 brand on the 19th of May this year. This PL brand was first sold in Belgium and Greece and was then introduced into all the other European markets of the group. This new 365 brand offers basic products sold at a constant low price all year long, 365 days a year. The peculiarity of the 365 brand is that it is sold under the same name and packaging in the group's different countries and in the different store formats within the countries.

The 365 assortment is made up of low-price items meeting the everyday and seasonal needs of customers. The first products have been launched in the following departments: grocery, frozen food, beverages, dairy, fruit and vegetables as well as wine. The 365 assortment is constantly being expanded with new products that shall reach 300 items by the end of 2004 in Belgium and Greece. At the same time, about 50 items will be available in the Czech Republic, Slovakia and Romania.

The prices set for the 365 product line match the prices offered by the hard discounters within the countries in which Delhaize Group competes.

To ensure a constant quality for the whole 365 product line, suppliers comply with the BRC standard as well as with various other strict quality criteria. (BRC stands for British Retail Consortium that has established a comprehensive quality system for European retailers.) Moreover, the quality of products is routinely checked by external laboratories.

A strategy of bulk purchasing provides lower production costs. The packaging for the 365 PL line is dynamic and identical for all markets. It represents a common logo: a lion in a sun against an orange background on top of 365. The description of the product is presented in up to 8 languages (French, Dutch, German, Greek, Czech, Slovak, Romanian and English). This unity conveys a strong European identity to the line but also reduces development and production costs.

Delhaize's aim is to simplify shopping for its customers. When all the 365 PL line products are available, Derby products-the Delhaize private label that competes with the hard discount stores and C-brands products-will disappear. This will simplify the offer, amplify the role of the 365 PL line and clarify the shopping shelves for an even more convenient and pleasant shopping experience true to the group's motto "Everyday fair price."

PL's Role at Delhaize

PL products account for almost one third of Delhaize turnover in Belgium and are really the backbone of Delhaize different retail formats in the country. PL products at Delhaize are truly innovative articles that inspire A-brands. Delhaize's innovative approach to PL products is illustrated in the ready meals sector with 200 prepared meals sold under their PL brand. Delhaize has worked in collaboration with Pierre Wynants, the renowned cook at "Comme chez soi," the 3 Michelin star restaurant in Brussels, to carry a range of premium and inventive fresh chilled meals that are 10 to 15% cheaper than A-brand products in the same category.

Delhaize was also a pioneer in terms of PL organic products. The retailer sells more than 600 organic articles today. It all started in 1985 when Delhaize sold the first organic bread in supermarkets; in 1998 the retailer started its own organic PL range. The sales of organic products at Delhaize represent more than 80 million euros and Delhaize is Belgium's number one retailer of organic products. Delhaize organic PL range uses the sub-brand Bio. It is the symbol for quality, food safety and traceability, and it is a key player in a country that has been confronted to many food safety crises in the recent past.

Delhaize offers over 5,000 private label items in its Belgian stores.

New strategic initiatives at Delhaize Belgium include:

• New point-of-sales system to reduce transaction times and training time;
• New data synchronization project to reduce invoice handling and errors;
• New distribution center for slowing items that is expected to increase labor productivity by 12%.

Outside Belgium, the other Delhaize Group stores also sell their own private label ranges under different names.

On the Greek market, Alfa-Beta offers a very broad and varied private label assortment to its customers. This assortment has recently been completed with new value-added products and new labels. The Multicultural Tastes range offers frozen ready to eat meals illustrating culinary traditions from all over the world.

The Vita Care range sells wellness and personal care products. The AB Choice range includes fresh products and is the result of a close and exclusive collaboration between the retailer and its suppliers.
Finally, the Alfa-Beta Close to Greek Nature range offers top quality regional products often from small local producers.

Limited Partnerships

Consolidation isn't a word that the Delhaize Group likes. The Belgian parent company of Food Lion-as well as Hannaford, Scarborough, ME, Kash 'n' Karry, Tampa, FL, and Harvey's, Nashville, GA-has found it's better to let its various operations listen to their own customers, rather than use one template from Maine to Florida.

This differs from the logic of most other multi-banner retailers, most notably and notoriously Safeway, Pleasanton, CA. The independent logic keeps more customers, though, Delhaize is betting.

Each of the four banners has its own identity, complete with store brand (although Harvey's uses the Shurfine private label). "As far as which items are developed, it's really market specific," says Donna Smith, Food Lion brand manager.

One of Food Lion's recent PL successes has been cobranded Cheerwine ice cream. It mixes vanilla ice cream with swirls of Cheerwine-flavored sherbet. In addition to Food Lion stores, it's now also one of the few ice cream flavors in Bloom's Table Top Circle.

"We sit down at the beginning of the year, and look at opportunities, and just basically throw out ideas," Donna Smith, Food Lion brand manager, says. "Once we found something that could be a good niche for us, then we went for it. We have basically tried to look for unique areas that our consumers recognize, and Cheerwine is a very regional type item. That has been a huge success for us."

It's been so popular that a second ice cream cobrand has been made with Sundrop. Both are also available in pint containers of pure sherbet. Dean Foods manufactures all of them.

"We have an awesome supplier," said Donna Smith, Food Lion brand manager. "Part of having a good program is having a good supplier. Those guys are just great about coming up with new ideas, keeping us fresh, and exciting in that category."

Another recent ice cream hit has been low carb products. Food Lion's low carb ice cream-made with Splenda-has been on freezer shelves for six months, while several national low carb brands were still in product development.

This independence in product creation doesn't mean the banners aren't in communication with each other. Much of the information sharing involves technology, not products.

"There's a lot of synergy between the banners," says Darrell Sapp, Bloom concept creator. "For example, we're working now on a system that lets us track down items on an individual level. That was a system that Hannaford worked on first, and they're now sharing it with Food Lion stores."

Delhaize's European banners also join in the information sharing, although not to the extent that the American banners communicate with each other. "For home meal solutions, right now there's a synergy group that includes Belgium as well as all of the United States," Sapp says. "It's very holistic in thinking of terms of what home meal solution could be. Part of that is sharing structure, process, even down to technologies from foodservice suppliers that may exist in one country but not another." Most information sharing is in regard to technologies, not products.

On the Go...to North Carolina

That's not to say products don't get shared. On the Go Bistro is a line of frozen entrees and desserts developed by Hannaford. The line was strong enough for Food Lion to import down to some of its stores for a trial run. They currently sell, among other locations, in the Table Top Circle at Bloom.
In this case, the products had the same appeal for Hannaford's audience as with Food Lion's.

The Cheerwine ice cream, on the other hand, is not so national. Cheerwine and Sundrop are popular beverages in Food Lion's mid-South home base but aren't sold in Hannaford's New England marketplace. "If Hannaford rolled out a Cheerwine up there, no one would know what is it," says Smith. So those ice cream flavors are just sold at Food Lion. They possibly wouldn't even have been considered if Delhaize had just a single banner running from Maine to Florida.

"I'm trying to make sure we keep those unique qualities to each banner. One of the goals is not to lose that identity," says Smith. "There are different place profiles when you're looking at regionalities that will come into play. We may have the same supplier on certain items, and for other items, we may choose someone different."

Food Lion checks with the other Delhaize banners to compare store brand prices and quality "all the time," Smith says. They even check store brand items from the same supplier, to make sure every banner gets the same quality.

"There's a lot of passion around the Hannaford brand, as well as the Food Lion brand. We each try to keep our own identity, and each banner still has the deciding factor of what will happen within their area," says Smith. "We rely on each other."

Little Fish Swallows Big Fish?

Last year's acquisition of Harvey's shows Delhaize's method of listening to customers.

Harvey's market area is South Georgia and northern Florida-filling space where neither Food Lion nor Kash 'n Karry had a particularly strong presence. While being a small chain compared to Food Lion, Harvey's had its own very loyal shoppers. Other chains might have converted Harvey's to a larger banner, but Delhaize is keeping the Harvey's name-and is actually converting Food Lions in the Harvey's trading area stores over to the Harvey's banner.

"Harvey's is a stronger regional brand there," says Jeff Lowrance, corporate communications manager. "It's the Delhaize Group looking to make sure we have the strongest presence in all of our markets. If you were truly trying to meet those local, regional tastes, and meet those consumer demands, you want to make sure that you ally yourself with that. Harvey's is a long-time brand, and it make sense to convert those Food Lions."