Industry Analysis on Food Lion - Research Paper Example

The company’s grocery chains have been changing their strategy to see an upsurge in their profits. Through the cutting out of its overhead the company has been in a position to offer affordable and low prices to its consumers and still manage to remain profitable and compete well with other big firms.

Food Lion has faced increased competition in the past forcing it to reduce the workforce and closing of some of the stores spread across 11 states in the country. It has also revitalized the grocery shopping experience through the introduction of the Bloom concept which is intended to provide a peculiar convectional layout and also competitive prices. Despite serious competition the company has been facing, it has managed to exponentially increase its sales. The firm's sales are backed by an MVP Card which is issued to any client who intends to have it.

It has currently added butcher departments, pharmacies; bakery departments, deli departments and also fresh seafood departments so as to favorably compete with other major firms. The discussion in this paper will analyze the operations in the company taking into consideration the firm’s competitors, internal and external operations, financial performance and analysis and the firm’s future projections. This will finally lead us into drawing a conclusion and recommendations to ensure the better performance of Food Lion.

Current Situation During the first half of the 21st century, Food Lion was continuously involved in various food experiments with different formats, creating its own brand of ice cream which is low fat, remodeling a number of stores, and opening in-store pharmacies. Despite a number of challenges that the firm has been facing, it has overall managed to prosper. The firm has considered satisfying clients as the major source of their strength. It has managed to give its customers a real one-stop shopping experience.

A microscopic look and analysis of the firm indicate that their main strength is their low price tags. This gives them a competitive edge against their competitors. Other outside opportunities include the desires for the consumers for low shopping and also the convenience. Food Lion is faced with a serious marketing mix. It puts a lot of focus towards the pricing portion though does not accentuate the product promotions and distributions. The systems which are associated with the problem are low name recognition, declining sales and poor quality of the product (Michman & Greco, 1996). This has resulted in a problem for the firm if by chance it were almost impossible to gain an edge in a market that is highly dominated by serious competitors.
The performance of the Food Lion has been reducing given poor strategies which the firm has adopted. This interference resulted in the serious promotion in the company to make the populace know about their reduced prices. The company last year repositioned outlets generated very high volume and sales growth last year on a specific comparable store basis. The company has been going through a transformation and the management has restated its intention of making the adjustments. Food Lion is currently working towards strengthening f its store brands, revenue growth accelerations, ensuring strict cost control and finally assuring free cash flow growth. The company’s underlying operating profit reduced by 17.5% which fell exactly in the middle of the projections which were between 15-20%.