SUPERMARKET RETAILING IN SOUTHEAST BEGINS TO CHANGE

David Merrefield

It's well known that the huge supermarket operator Winn-Dixie Stores, Jacksonville, Fla., filed for bankruptcy reorganization in February and has been attempting to sell or shutter stores and other assets ever since, and had been doing so for quite some time prior to the filing.

The large-scale disposition of assets implies that the shape of food retailing in Winn-Dixie's core operating area, the Southeast, is destined for change. Major operators in the area are faced with several possibilities as a result of the downward spiral of Winn-Dixie.

Some could opt to acquire a few of its store locations, or to spruce up their existing stores in a bid to attract Winn-Dixie's now-storeless customers. Some might decide to do both.

Now enough time has passed that a few Winn-Dixie competitors have issued financial statements that offer clues about what they're doing about the new situation. Last week's SN featured financial reports from three such companies, each of which made some statement about the Winn-Dixie connection.

The three are Delhaize Group (the operator of Food Lion and other banners), Ruddick Corp. (the operator of Harris Teeter) and Ingles Markets. Let's take a look at each and see what they are doing.

Delhaize Group: This is the company that may be best positioned to benefit from Winn-Dixie's diminished fortunes. Some 102 of its Food Lion stores are near Winn-Dixie locations slated for closure. Food Lion will be the obvious alternative for many displaced Winn-Dixie shoppers, since both banners cater to the value-oriented end of the economic continuum. Delhaize plans to acquire six stores from Winn-Dixie in addition to the dozen it bought previously. More generally, Delhaize is undertaking a spate of major remodeling projects and has started a new program based on its own-label beef line. For many years, Winn-Dixie styled itself as the "beef people."

Finally, Delhaize is proceeding with the successful rebannering of its charmlessly named Kash n' Karry stores to the Sweetbay banner and concept. That concept is characterized by an emphasis on service, together with a wider selection of fresh prepared. Delhaize is stepping up the store-conversion rate now. See Page 20.

So Delhaize is at work to capitalize on market voids left by Winn-Dixie. It should be noted, though, that Delhaize's second-quarter profit fell 4.6%. It's not too soon for these changes.

Ruddick: This company is increasing the pace of new-store activity at its Harris Teeter unit. Store projects will also include six Winn-Dixie stores it acquired in North Carolina for nearly $9 million, including inventory costs. It intends to spend $24 million more to remodel them. Three of the acquired stores will replace Harris Teeter stores. The company also plans to open 16 stores in Virginia. Winn-Dixie is exiting its relatively small store presence in that state.

Ingles: Finally, Ingles intends to open five stores next year. Many of its current locations aren't too far from Winn-Dixie units, so it's anticipated by Ingles executives that it too will benefit.

This represents little more than the beginning of what will prove to be a significant revamping of supermarket retailing in the Southeast.