NEW YORK — Winn-Dixie Stores is generating annual sales of $500 per square foot at new stores and recent remodels — compared with $300 per square foot at earlier remodels — and is moving forward aggressively to install elements of those “transformational” stores at all new and remodeled locations, the company's top executive said here last week.
Speaking at the Barclays Capital Restaurants & Retail Conference, Peter Lynch, the chairman, president and chief executive officer of Winn-Dixie, said the so-called transformational stores are geared to “fresh, family and fun — that's where we're moving the business.”
Transformational remodels cost more than conventional remodels, he pointed out — $5 million per store, compared with $2 million. “But we were getting a sales lift of 10% or greater at the traditional remodels, whereas the transformational remodels give us a huge lift.”
Lynch did not define the overall lift in specific terms. However, he said perishable sales in transformational remodeled stores of 42,000 to 57,000 square feet are approaching 38% or 39%, compared with 31% at traditional remodels.
Winn-Dixie is also testing transformational remodels at smaller stores, at a cost of $3.5 million per unit, Lynch noted — for example, at a store in Aventura, Fla., near Miami, “and the early signs there indicate we've got another winner,” he said.
“And we've got 15 other stores that are somewhere in the process of being remodeled, and those ought to be open in the first half of our fiscal year [the second half of calendar 2011],” he added.
Lynch said Winn-Dixie will pursue transformational remodels at three different formats: full-sized stores, midsized store and base (smaller) models.
The entrance to the stores puts consumers in a farmers' market-style produce section, he explained. “We don't even put a front door on the store — just a grate that's 40-feet wide that goes up into the ceiling, so the customer just walks into this tremendous perishables side of the business.
“Entering into the produce department makes the consumer feel good, and that makes for a great customer experience.”
The perishables area also includes deli sections that emphasize meal solutions, Lynch said. “The deli experience is extremely important, and you've got to find a better way to have meal solutions for the consumers, with someone with credibility behind that deli counter.”
Lynch said he knew Winn-Dixie was on the right track with its transformational approach when a customer referred to one of the chain's stores as “that new ‘Winn-Dixie Whole Foods.’ That's when I knew we had a winner,” he explained.
“So we've clearly transformed the company and transformed the brand, and that's what we've been trying to do — that's what this whole journey has been about, and we've gotten there.
“Now it's a matter of continuing the journey and bringing a lot of these transformational aspects back into one of our three models.”
The primary “transformational” model is in new stores, including units in Covington, La., Margate, Fla., and Mobile, Ala., that Winn-Dixie has opened over the past two years, Lynch said.
All three stores “took off like a rocket ship from day one,” he pointed out, “and they have not slowed down since.”
The company plans to use the same formula at new stores in Apopka, Fla., near Orlando, and one in Jacksonville that are scheduled to open around July 1.
Of the 250 stores Winn-Dixie has already remodeled, “some pieces [of the transformational format] can be easily replicated without spending a lot of money, and we're moving on that very, very rapidly,” Lynch said.
“Among stores that haven't been remodeled, it's a little bit more difficult. Some of the stores are just so old and the equipment is so old, and it's not a place that you can get all these elements in very easily.”
