Belgium based Delhaize Group hopes to increase its U.S. Private Brand share to 35% by 2013, Pierre-Olivier Beckers, CEO, said in a statement accompanying the company’s latest earnings report. The penetration increase will occur in the seven U.S. banners which Delhaize owns including: Food Lion, Hannaford, Bloom, Bottom Dollar, Sweetbay, Harveys and Reid’s. During the fourth quarter, Delhaize posted excellent results that appear to be evidence of the success of initiatives included in their New Game Plan. He also confirmed not only the introduction of the new “My Essentials” Private Brand but that it would replace the wildly successful value tier Private Brand, Smart Option. It remains to be seen how the non food products which are currently in Smart Option will be treated.
Pierre-Olivier Beckers, CEO, said…
On many occasions we have talked to you about private brand assortments. Over the past quarters we have seen steady growth in the sales volumes generated by these assortments. In the U.S., although coming from a lower base than in Europe, the contribution of private brand to total sales now stands at more than 26% at Food Lion, an increase of 120 basis points compared to two years ago. We have seen the same positive trends at Hannaford and Sweetbay. At Delhaize Belgium, thanks to a mix of private brands and national brands, customers spend less money shopping at Delhaize Belgium than at other supermarket competitors.
In the U.S. we are setting a very ambitious private brand target: by the end of 2013 we plan that 35% of revenues will be generated from private brands. Our teams are focused on the design of new merchandising techniques, commercial plans as well as the assortment itself. One of these initiatives is the introduction of MyEssentials, a new range of value line products that will replace Smart Option. By the end of the second quarter of 2011, we plan to have introduced 500 of these new items in all our U.S. stores, quite an ambitious goal itself.
He went on to discuss the new Delhaize America organization
A couple of weeks ago, Delhaize America also finalized the creation of a common procurement organization for all U.S. banners. The new leadership structure in place will galvanize efforts to improve gross margin, optimize assortments and planograms, exchange price management expertise and private brand knowledge. We are excited about this important new step as it will enable us to speak with one single voice with our suppliers in the U.S. We are currently piloting new business processes for a number of selected categories and by the end of the third quarter of 2011, management of all categories should have been integrated into the new Delhaize America organization.