This excerpt taken from the DEG 6-K filed Apr 12, 2005.
Attracting the Customer
After strong sales in the first months of the year, Alfa-Betas sales were less robust in the summer months due to the Olympic Games and price pressure. Sales recovered in the fourth quarter. Alfa-Betas store network was extended by ten new stores, including two company-operated supermarkets and two City stores.
The company focused on expanding its franchising network, modeled on Delhaize Belgiums experience with affiliated stores. Six new Trofo Market stores were added in 2004. The franchised network allows the company to grow sales and extend its presence to new geographic areas without major investments.
Alfa-Beta reinforced its customer appeal by focusing on assortment, price competitiveness and service. Particular emphasis was placed on the enlargement of exclusive product lines such as regional products under the Alfa-Beta close to Greek Nature brand, premium-quality perishables labeled AB Choice and the organic Green Leaf non-food range. The 365 brand was introduced with more than 100 items at year-end.
The company enhanced the quality and range of its bakery and meat departments. In addition, supply chain, staffing and marketing were thoroughly evaluated and modified. Customer reaction and sales increases in these categories are promising.
Alfa-Beta reinforced its price position in reaction to increased competition. Prices on approximately 2,300 grocery and non-food products were lowered during 2004.
The companys customer loyalty program was reinforced by the launch of the AB Visa credit card in June 2004, rewarding Alfa-Beta customers not only when shopping at Alfa-Beta but for each transaction with their Visa card. Since the launch of the AB Visa card, the number of people enrolled in the AB loyalty program has increased significantly.
Alfa-Beta also focused on efficiency. In December 2004, Alfa-Beta absorbed the Trofo legal entity, leading to signifi cant financial and operational efficiencies. Supply chain reengineering initiatives and the increased use of technology led to substantial warehouse shrink reduction, store service improvements, traceability and food safety enhancements and cost efficiency.