Dive Brief:
- Southeastern Grocers announced it will convert seven more Winn-Dixie stores to its discount Harveys Supermarket banner, according to Supermarket News.
- The conversions are slated to happen in early August, and will bring the total number of Harveys stores to 77, SN reports.
- For some stores, this represents the fourth brand change in recent years, according to SN. A Tampa location, for instance, was originally a Kash & Karry store, then became a Sweetbay store. The store changed again after owner Delhaize sold the Sweetbay brand to Winn-Dixie.
Dive Insight:
As Winn-Dixie continues to struggle, owner Southeastern Grocers has been steadily converting stores to the discount Harveys Supermarket banner as well as its Fresco Y Mas Hispanic banner. Both brands offer more distinct positioning while also capitalizing on shifting demographics throughout the southeastern U.S.
It’s a rational move for the company, but it doesn’t address the larger problems that Winn-Dixie and its more than 450 stores still face. Southeastern and its private equity owner, Dallas-based Lone Star Funds, have been slow to update stores. As a result, its Winn-Dixie and Bi-Lo banners have lost significant market share to stronger competitors.
In the Tampa Bay market, where Southeastern is converting one location over to the Harveys banner, Winn-Dixie’s 100 stores have just a 16% market share. In comparison, Publix’s 117 stores have a 39% share, according to data provided to Food Dive by Chain Store Guide.
Southeastern has sped up its store updates, with 90 stores remodeled across the company over the past year, according to SN. The company has also closed poor performing stores. Two months ago, Southeastern announced it would shutter 20 stores while also restructuring its corporate management.
Under chief executive Ian McLeod, Southeastern took some much-needed steps toward becoming a more competitive grocer. This included price cuts, chain-wide efficiency measures and a private label revamp that introduced a tiered assortment of everyday, premium and bargain-priced goods. However, last month McLeod stepped away from the company, quickly resurfacing as the chief executive of Pan-Asian grocery Dairy Farm.
Some industry observers have speculated that McLeod left because the competitive landscape — which now includes discounter Lidl and surging Aldi and Walmart — presents significant challenges, and Southeastern isn’t spending enough money to confront them.
Winn-Dixie, which previously filed for bankruptcy in 2005, faces a tough road ahead. Some see it as the next casualty in the escalating grocery wars. In an interview with Food Dive, grocery analyst David J. Livingston said the defection of top management is a tough blow for the brand, and said he expects the chain to file for bankruptcy again soon.
