Food Lion's New Deal

Krispy Kreme Table

Food Lion is a grocery store that over the years has been working hard to clean up its image with one being visible and another one not so visible; until now. The obvious one is the amount of displays up and down the aisles and throughout the store.  Customers’ who operate the shopping cart the same way they drive their car keep hitting and knocking them down as these displays kept getting bigger and bigger. These displays are all gone now. A cleaning program was started to where an employee’s only job is to go around the store all day cleaning. Now it is very easy to shop in these stores.

Also they have a computer system that is doing all the ordering for the stores. It knows what was ordered a year ago and what has been ordered and sold from past orders. Basically, it’s working great in many of these stores but no so good in the ones that use to be a high volume store. One store has five pallets of juice backstock. Hopefully this ordering system will be a great deal better than the one that orders for Wal-Mart.

But there is another side to these new Food Lion programs that many people may have begun to notice. To stay in business one has to sell products people want to buy. Make it cheap but sell it for a greater profit. Even though Food Lion is doing great in sales and has a long future in the grocery business, one thing has become clear as to what sells and what doesn’t. And for Food Lion, their store brands do not sell as well as the name brands. The store brands are cheaper to make with a high profit margin compared to the name brands that has a small profit margin. So what is a company to do?

Well right now, all the Food Lion stores in the Raleigh, North Carolina area are in a ‘Pilot Program’. That means Food Lion executives want to see what would happen if all the vendors’ displays, shelf space and promos were taken out of those stores. And in its place would be their store brand names of; Food Lion, My Essentials and Home Essentials. With that, many vendors saw their position in the stores going from an endcap to a floor stack in frozen foods or to nothing at all. In some of these stores the Krispy Kreme table, which is a common feature in all grocery stores in the area, are collecting dust in a few Food Lion backrooms as their donuts are now located in a small side cubby hole on a back endcap.

And now that a computer is doing all the ordering for these stores, there has been another grocery reset with many more name brand products are condensed or removed from the shelves altogether to make room for more store brand products. Food Lions Pilot Program is basically to see if their products start selling better than the name brand items. If it works to their advantage then all their stores will follow suit. Thereby giving the company greater profits as many of these companies that deal with Food Lion have to cut back their sales and products to the chain store.

The worst case scenario is these companies will eventually have to cut back production of their products eventually including laying off many employees as well if the Food Lion Pilot Program is successful and as other grocery store chains follow suit. If not then this program will quietly disappear along with all the other different ideas over the years.