Food Lion Plans 2 New Store Brands in D.C. Area

Ylan Q. Mui
The Washington Post

WASHINGTON - Food Lion LLC, the area's third largest grocery chain, said yesterday that it will convert some of its stores to new high- and low-end brands, an unusual strategy driven by the splintered demographics of food shopping.

By the end of the year, some of the chain's 60 stores in the Washington area are to be transformed into high-tech gourmet markets named Bloom while others will become Bottom Dollar, a no-frills discounter. Some stores will continue to operate as Food Lion.

"We realize that the Washington market is so diverse," Food Lion spokesman Jeffrey Lowrance said. "It is definitely not a one-size-fits-all market."

The company said it has not determined which stores will be converted.

Traditional grocers have been under attack in recent years. Big-box stores such as Wal-Mart have undercut them on price and sales volume while high-end chains such as Whole Foods Market and Wegmans Food Markets Inc. have beat them on quality and customer service, leaving grocery stores languishing somewhere in the middle.

The area's two largest chains, Giant Food LLC and Safeway Inc., are redesigning stores to fight back. Giant plans to open eight stores this year under a new prototype with expanded meat, bakery and seafood departments. Safeway has remodeled about 30 of its local stores and plans to turn all of its locations into "lifestyle centers" within five years.

Food Lion's approach is the most dramatic so far, covering the entire spectrum of shoppers. Lowrance said the company is not worried that its new stores could end up cannibalizing the old ones. "They're differentiated enough that they can serve a broader range of customers, and that's the whole idea," he said.

Food Lion spent two years studying international trends and grocery store concepts to develop Bloom, which features upscale offerings, such triple-cream St. Andre cheese. Products are grouped by category -- breakfast items such as milk, eggs, cereal and pancake mix would all be found in the same aisle, for example.

The stores also employ cutting-edge technology, such as handheld scanners and updated self-checkout lanes. Wine kiosks would be able to call up information electronically on appropriate food pairings.

Bottom Dollar takes the opposite strategy. Its stores have no frills -- no bakery, no deli and customers bag their own groceries. Products are displayed on pallets or in bins. Lowrance said the stores are aiming for a fun environment: Employees are to wear T-shirts with slogans like, "I work here and still can't get better prices."

Food Lion operates 1,300 stores in southeastern and mid-Atlantic states. It opened five Bloom and three Bottom Dollar stores in North Carolina last year, but the Washington area would represent its first use of the strategy in a major market.

Food Lion, owned by Brussels-based Delhaize Group, is the third most-frequented grocery chain in the Washington area, according to Scarborough Research. In a recent poll of shoppers, the market research firm found that 27 percent had visited a Food Lion within a week. Fifty-eight percent had gone to Giant, while 40 percent shopped at Safeway.

Though Delhaize does not release sales information on its Food Lion subsidiary, chief executive Pierre-Olivier Beckers in a statement credited the chain for much of the firm's U.S. sales growth. The fourth-quarter gain from U.S. operations rose by 4.4 percent to $16.6 billion from 2004.