Dive Brief:
- Food Lion is investing $158 million to remodel 92 of its stores in the greater Myrtle Beach, Florence, Columbia and Charleston, South Carolina markets during this year. The new layouts will feature a variety of upgrades including enhanced deli and bakery service departments and/or walk-in produce coolers.
- As part of the expansion, Food Lion will increase the product offerings in each store with items that are relevant to each community, including more local, natural, organic and gluten-free items.
- The investment will also be used to help lower prices in addition to hiring 2,000 store associates to enhance its customer service capabilities. It's also investing in its "customer-centric training" for employees at each store.
Dive Insight:
North Carolina-based Food Lion is in the fifth year of its brand-wide "Easy, Fresh and Affordable" model, and it's giving nearly 10% of its stores a serious makeover. The brand has been on a steady trend of revamping its locations. Between 2014 and 2018, it remodeled over half of its stores across 10 states. It then announced upgrades to 105 locations in May 2018 through a $168 million investment.
When choosing which stores to remodel, Food Lion likely took into consideration the gap left open by Bi-Lo's store closures. The two are close competitors in the area and the majority of the remodels announced by Food Lion in South Carolina are in the same locations Bi-Lo shut its doors. The strategy move gives Food Lion the opportunity to gain a stronger foothold in the state.
By and large, remodels are a worthwhile investment, with Target reporting a 2% to 4% boost in sales following store makeovers. They also help draw new customers who are curious to see the changes. Roughly 30% to 80% of revenue growth comes from new shoppers, according to research from Monash University.
The trend toward revamping existing stores, however, appears to have a theme. A number of retailers investing in makeovers are making significant upgrades and adding flashy features in an attempt to lure customers who have countless shopping choices.
Texas chain H-E-B recently remodeled one of its store locations to add a number of bells and whistles, including a plethora of organic products, a sushi station, a scratch bakery and a full-service pharmacy. Albertsons is planning a new experienced-focused flagship store in Idaho, while Whole Foods is opening a south region flagship store with four fast-casual eateries, a rooftop bar and an old-world style butcher. Whole Foods recently announced that it plans to re-brand its existing 365 stores as regular Whole Foods stores by the end of 2019, which will give the Amazon-owned retailer a chance to add upscale features.
Food Lion's upgrades are just one of many moves by parent company Ahold Delhaize to take a future-looking, technology-focused approach to its stores.
Last year, Ahold Delhaize's Stop & Shop banner unveiled new-look Connecticut stores with meat smokers and kombucha fountains. The locations will serve as laboratories for the chain's innovation and growth. Stop & Shop is also launching more automated fulfillment centers this year. It developed a supply chain innovation arm through Retail Business Services, a technology-focused entity that exclusively serves Ahold Delhaize's brands. Last year, Ahold Delhaize unveiled its Leading Together initiative that involves bigger investments in technology like AI, robotics and tools to create seamless and personalized shopping experiences.
