Dive Brief:
- Brookshire Grocery is buying eight Louisiana Winn-Dixie stores from Southeastern Grocers, according to Winsight Grocery Business. Terms of the sale were not announced.
- When the transaction closes, the stores will close for a few days and re-open under Brookshire’s Super 1 Foods banner. The stores are in the southern Louisiana Cajun region known as Acadiana.
- Southeastern Grocers is known to be having financial challenges. There is speculation the company may sell or close stores in a reorganization, and that Chapter 11 bankruptcy protection is imminent for its Bi-Lo LLC subsidiary.
Dive Insight:
The eight Winn-Dixie store locations are apparently healthy, and will strengthen Brookshire Grocery while expanding its presence in Louisiana. For Winn-Dixie, the sale could be the first of many as Bloomberg recently reported the chain and its parent company, Bi-Lo LLC, are headed for bankruptcy.
Trey Edwards, Winn-Dixie regional vice president for Alabama, Louisiana and Mississippi at Southeastern Grocers told Supermarket News, “While we cannot predict the future of every store, we’re continually evaluating our store footprint in order to provide our customers with an improved shopper experience.” Winn-Dixie will continue to operate in Louisiana, he said.
Asked how the sale of the stores relates to any possible Chapter 11 filing by Southeastern, Edwards said: “This is in no way tied to any other announcement of any kind. Should there be another change in our portfolio’s position, we’ll communicate that change accordingly.”
The deal comes on the heels of a bankruptcy filing by Tops Markets LLC. Burdened with a heavy debt load and struggling against stiff competition, the 169-store chain plans to keep its stores open and restructure its finances before the end of the year.
Whether Southeastern’s chains or Tops can recover their competitive positions is an open question. Southeastern’s private equity owner Lone Star Capital has been reluctant to invest in the retailer. Tops has to deal with the dual pressures of debt and increasing competition. Both retailers must become price competitive, differentiated in their marketing, while establishing an online presence. Southeastern Grocers, for its part, has introduced a new private label lineup, remodeled some stores and converted others to its discount Harvey's banner, or to its Hispanic format, Fresco Y Mas.
The market is rapidly changing for many traditional supermarket operators. Walmart is solidifying its position as the number one player, and discounters are expanding. Robust supermarket companies like Kroger, Publix and Ahold Delhaize are strengthening their positions, while Amazon is making inroads online as well as with Whole Foods Market. The middle of the market can be a precarious place, meaning store divestments, consolidation and even bankruptcies may very well increase in the months and years to come.
The secret for reversing the trend could come down to customer care. Holding in-store specials also can attract more shoppers and improve sales. If independent stores struggle financially, they could go the way of Central Grocers and Marsh Supermarkets, or become takeover targets by the bigger chains. But at the end of the day, these efforts could ultimately just prolong their inevitable demise as it's pricing and convenience that ultimately impress consumers.
