Food Lion Inc. 2110 Executive Dr, Salisbury, NC 28147

1

By: Keith Byrns

Table of Contents

Balanced Scorecard… … 2-3

SWOT Analysis … … 4-5

Porters five forces… … 6-7

Resource Similarity … … 8-9

PESTEL … … 10-11

Value Chain… … 12-13

Conclusion… … 14

References… … 15

2

BALANCED SCORECARD

Mission – Is to ensure that we remain the low price leader in the supermarket industry without compromising quality or customer satisfaction.

Vision - We will produce extraordinary results by serving our customers, Associates, Shareholders, and Communities every day.

Strategy – to promote growth, efficiency, and sustainability as low-cost leader

Financial Gain markup Keep profits up

Learning and Growth New Strategy Sustained for long term growth Uses mistakes to its advantage

Customer Provide great service Make shopping easy, fast, and affordable Interested in what customers want

Internal Business Processes Processing Packaging Distribution Transportation

3

Food Lion wants to be the overall low cost leader in the supermarket industry while still

producing quality products and great customer service. Food Lion’s strategy is maintaining its

low cost provider by following three pillars growth, efficiency, and sustainability. Food lion

wants to continue to grow by expanding in current markets as well as enter new markets to meet

customers’ needs. The private label brand of Food Lion “My Essentials” continues to grow and

offer everyday products at a lower price. Food Lion wants to be as efficient as possible to reduce

wastes and costs. The way they overview how they order, ship, stock, and sell products will help

eliminate costs down the value chain to make products efficiently and affordable. Lastly food

lion wanted sustainability they wanted to develop ways to work differently and see how good a

supermarket can be. By offering private label products they can increase revenues without

compromising their strategy. Food Lion’s sustainability focused on rebuilding based off what

customers said. Surveys and research was used to help collect data to reform this new strategy.

Food Lion wants to make sure they remain profitable by making sure they earn their highest

potential while still maintaining the low price. Food lion has implemented a new strategy in not

only being the low cost provider but by also delivering great customer service. They do not want

to compromise the price of products and want to make shopping enjoyable for customers. The

company is built for the long run and has just remolded all their stores as well. They are

interested in what customers seek is most important in grocery stores and what Food Lion can do

to make their experience an enjoyable one. Food lion has a great internal business process which

makes it easy to process, pack, and distribute to their stores with efficiency. Products are rarely

out of stock at warehouses because of the system Food Lion has in place to ensure that their

shelves are full. They can send products to their other warehouses to ensure that all five

warehouses have the appropriate products that they need for their stores.

4

Strengths

Easy, Fast, Affordable Adapting to what customers want Locations Nationwide Low cost leader strategy

Weaknesses

Known for having low end perishable High worker turnover ratio Lower quality of products

Opportunities

Customer Segmentation strategy Wider product selection Continue to be low-cost provider Increased private label sales Better reward plans for employees Remodeled stores

Threats

Wal-Mart opening of Supermarkets Other retailers offering grocery’s Labor unions

Strengths

5

Food lion has implemented a new strategy that is taught to employees to help customers make

shopping easy, fast, and affordable. A survey taken by supermarket consumers found that being

able to find what they want, finding it fast, and purchasing it at a low price is what was important

to customers. Food Lion has 1,300 stores in the South East and Mid Atlantic to make shopping

convenient and affordable. Food Lion’s low cost provider strategy helps bring customers in

while the great customer service keeps them coming back.

Weaknesses

Food Lion has a bad reputation for having low end perishable. They have recently changed to

prepackaged meat as well as buying local produce. Food Lion’s has a high worker turnover ratio

and has added employee benefits in order to retain employees for longer. Having high ratio costs

money to train and dress new employees.

Opportunities

Food lion has a customer segmentation strategy that it implements in all of its stores. There are

different departments so each one can focus on what is important and deliver what the customers

need. Food Lion has remolded their stores in order to gain market share that they have lost from

straying away from their overall lost cost provider. They have revamped their strategy to make

sure they continue to be an overall low cost provider. Offering their private brand increased sales

and profitability as well as offering customers lower priced product from major brands

Threats

The continuing trend of labor unions could eventually hurt Food Lion. As of right now they have

a no union policy but laws could prohibit companies from enforcing this. Wal-Mart’s opening of

a chain grocery stores could potential threaten their current market share.

6

PORTER’S FIVE FORCES

Threat of New Entrants – Low Hard to enter Market Not very profitable

Bargaining Power of Buyers – Medium Could shop at competitor Can switch brands

Threat of Substitute – Low to Medium Grow own food Dine out

Bargaining Power of Suppliers – Low Needs products on shelf’s Suppliers depend on Supermarkets to sell their products

Rivalry among Existing Competitors – High Many different companies in industry Many locations for competitors

7

The threat of new entrants for the supermarket industry is considered low. It is very expensive to

start a grocery store and companies do not just enter just this market without having an

established company. The supermarket industry is also not very profitable and usually only make

pennies for every product sold. The bargaining power of buyers is considered medium.

Customers can go shop at different supermarkets that can offer either the same or similar

products that Food Lion has. Since Food Lion buys their products in bulk to lower costs and to

offer customers the quality of products they want at a low price. Customers can switch to private

brand labels, but for food lion this would increase their sales for their private brand “My

Essentials”. The threat for substitutes in the industry is medium. Depending on the economy

customers may decide to grow their own food or dine out. People need to eat so there will always

be supermarkets. The bargaining power of suppliers is low in this industry. Companies want their

products on the shelf and for some of these products depend on supermarkets in order to make

sales. Since Food Lion has many locations as well they buy products in bulk giving suppliers a

good amount of business. Rivalry among existing competitors for food lion is high. Wal-mart is

opening a line of grocery stores to compete in the industry. Other retail companies such as Target

and K-mart selling retail merchandise as well as groceries will attract customers who want to get

all their shopping done in one place. This makes it more convenient for customers and can

‘reduce Food Lions profitability. As more companies decide to offer the same products as Food

Lion rivalry continues to increase as Food Lion continues to improve ways to stay ahead of the

competition and make them the low cost leader.

8

RESOURCE SIMILIARTY AND MARKET COMMONALITY

9

High Market Commonality and High Resource Similarity

Harris Teeter and other super markets have the same resources and products. Both companies are

high competitors and buy from the same suppliers and therefore have either the same or similar

products on their shelves. The target markets are similar with a savings mentality for both

grocery chains.

High Market Commonality and Low Resource Similarity

Wal-mart has similar resource similarity since it does offer some similar products of Food Lion.

They have a high market commonality because they offer low priced products. It is important to

keep an eye on Wal-Mart because in the future they could move from this area to a High Market

and High Resource similarity with the launching of their new grocery stores.

Low Market Commonality and Low Resource Similarity

Food Lion and 7-11 have a low resource and low market commonality. They do not offer similar

products and therefore do not have the same resources.

Low Market Commonality and High Resource Similarity

Family Dollar has a high resource similarity since they both offer many of the same products.

The market commonality is low because Food Lion is supermarket while Family Dollar offers

products that are cheaper and a more wide variety of different products.

10

Political

Tariffs on international products Product restrictions

Economic

Global financial crisis Unemployment rate Gas prices

Social

Gender Local Communities Buying habits/Income

Technological

Self –checkout Order and Pickup Rapid technology growth Research and development

Environmental

Climate change National disasters Co2 emissions

Legal

Product recalls Food Safety/security Food Regulations Labor laws

11

Food Lion has products that are outside the country and has to monitor the taxes. If taxes rise

they can reduce their profits and can sometimes compromise their low cost strategy. If products

have restrictions or regulations such as cutting meat they have to follow procedures and rules

which can cost time and money and reduce productivity and profits. If a global crisis consumers

have less income to spend and it changed buying habits. Ensuring the affordability of products is

important as to not change the low cost strategy. A high unemployment rate makes it difficult to

hire quality associates that can deliver. Buying habits and gender influences the type of products

that Food Lion offers. Since women usually do the grocery shopping offering a wider range of

products that attract these customers will raise profits. Local communities play role for Food

Lion since they locate their stores usually in low income and low populated areas to attract their

market. Technology grows fast and keeping up to date with trends and the latest technology will

help Food Lion to grow and be more efficient. Using the developed technology will keep

ordering systems or efficient and help employees complete tasks and procedures in a more timely

manner. Depending on the climate and seasons it can change the sales of products and skew the

numbers that would be used for next year to estimate what to order. Food Lion produces 2.6

million tons of co2 a year which contribute to national disasters. Laws are put into place that

monitors their emissions and puts regulations on it. Food recalls can hurt their image as well as

the products image. If a product is recalled, customers may be hesitant to purchase not only those

products but also other products of that particular brand. To ensure that food is handled safely

and all food regulations are met costs money to ensure that they are followed. Labor laws does

not really affect food lion as they offer good employee rewards as well as treat their employees

correctly. If minimum wage is raised in the future it could compromise the way they do business

and not be able to offer products at low costs.

12

VALUE CHAIN

Support Activities

Firm Infrastructure General administration Executive committee Different management levels

Human Resource Management Maintain low cost leader strategy Maintain employees that can deliver

Technology Development Systems Development Product Research and development

Primary Activities

Inbound Logistics Raw Materials

Operations Progress and Packaging

Outbound Logistics Distribution Networks Distribution and Transportation

Marketing and Sales In- Store Service Consumption and Disposal

13

Food Lion’s value chain starts with both growing fresh products and extracting ingredients for

processed products. Products are shipped and packed and sent to the seven different distribution

centers in five states. Having their own distribution centers and warehouses allows food lion to

buy products in bulk quantities and reduce costs. This enables them to offer high quality products

for customers at a lower price. Trucks then deliver it to the stores where employees place the

products on the shelf or prepare them depending on the departments. Food Lion’s marketing

team has developed a low cost provider strategy in order to attract customers while still

providing excellent customer service. Food Lion wants to make shopping easy, fast, and

affordable for customers. They do not want shopping to be a chore and for customers to enjoy

coming to our stores. Food Lion has many different levels of management to keep in check

different departments and to ensure the store is run smoothly. The executive committee manages

the board of directors and can make some authority decisions for the company. Human resources

for Food Lion hire employees and make sure they receive the correct benefits and training.

Human resource management has recently implemented a new training system to help deliver the

expected great customer service. The systems developments for Food Lion has enhanced their

resources and enabled to have a top of the line automatic ordering system. This allows them to

accurately order products and to reduce errors that an employee might make. Food lion has

recently acquired new computers and registers to help enhance a customer’s shopping

experience. They make sure that Food Lion stays competitive in the supermarket industry by

maintaining an overall low cost strategy. The research department created surveys to help better

understand what’s most important when shopping at a grocery store. The way Food Lion

packages their products helps reduce waste and enables the consumer to dispose of it properly

and safely.

14

Conclusion

Food Lion was founded as Food Town and they wanted to provide lost cost products with great

customer service. Over the years they have moved away from this strategy and have just now

started to get back to their roots. If Food Lion continues to implement an overall low cost

provider strategy while also offering quality products, with great customer service they will

continue to flourish. Remolding all the stores and changing the experience customers get when

they shop at Food Lion will be instrumental. This will help differentiate themselves from other

supermarkets and will give customers a reason to shop there. They want to make shopping easy,

fast, and affordable while making shopping fun and not a chore. Food Lion also needs to monitor

food laws and regulations as they are a major impact in this industry. A new law or regulation

could impact not only Food Lion but the supermarket industry as a whole. I recommend that

Food Lion continues to head in this direction and continue to improve in areas that they have

realized are weak. After Food Lion had its grand reopening last week customers have expressed

their approval and satisfaction to the changes that Food Lion has implemented. If Food Lion

continues this strategy I could see them as one of the top supermarkets to shop at in the country.

Food Lion needs to also watch the rivalry with Wal-mart since they are opening their own

version of grocery stores. Wal-Mart has a similar strategy buy being a low cost provider and they

can take away some of the market share from Food Lion when they open these stores. They can

expand their region locations in the future when time permits. Food lion needs to make steps is in

place to ensure that they retain their strategy and do not go back to old habits. Being the low cost

provider is what made them so profitable back in 1957 and they need to make sure that they do

not sway away from their strategy that has worked so well.

15

References

Sustainability Progress Report. (2012, November 16). Retrieved November 10, 2014, from http://d1pmybhtyfsbgv.cloudfront.net/Assets/Docs/corporate/FoodLion_sustainability-report.v-2-2-6917-0.pdf

About Food Lion. (n.d.). Retrieved November 10, 2014, from http://www.foodlion.com/Corporate/CompanyInformation