As plain vanilla grocery stores fall out of favor, Winn-Dixie goes upscale

Feb 5, 2016, 2:42pm EST

Ashley Gurbal KritzerReporterTampa Bay Business Journal

With the vanilla grocery store becoming a retail relic, Winn-Dixie is rolling out an upscale concept with a focus on organic options and prepared foods.

Winn-Dixie, owned by Southeastern Grocers LLC, this week unveiled a newly remodeled store in SEG's hometown of Jacksonville. The store now has a butcher counter with Florida-raised, grass-fed and organic meats and an artisan cheese counter, among other upscale touches.

 

Winn-Dixie Baymeadows features locally-grown produce displayed on ice; a Coffee Shop and… more

“This store provides us with an opportunity to redefine what Winn-Dixie can provide for its customers in a contemporary, friendly and exciting in-store environment focused on stunning quality fresh food, specialty stores-within-stores and very competitive prices,” Ian McLeod, president and CEO of SEG, toldthe Jacksonville Business Journal, a sister news organization.

It's the first of 50 remodels to come this year, though SEG would not comment on if or when any stores in the Tampa area would be remodeled. Some aspects of the Jacksonville store could be incorporated into those renovations.

"With every remodel, we will be listening carefully to the community and designing our stores to fit their needs and the unique services required for each of the communities in which we operate," Zack Bingham, senior director of communications for SEG, said in a statement.

The remodels and a recent price-cutting campaign Winn-Dixie rolled out in January are necessary to stay relevant in the hypercompetitive Florida grocery market.

In Central Florida, SEG trails Lakeland-based Publix Super Markets Inc. andWalmart Stores Inc. in market share. SEG, with 185 stores in Tampa, Orlando, Fort Myers and Port St. Lucie, controls almost 13 percent of the market in Central Florida, according to The Shelby Report, an industry trade publication.

Publix, with 397 stores, controls 43 percent of the market; Walmart, with 158 stores, has 29.2 percent market share.

The grocer trails Publix and Walmart in North Florida as well, though it controls 24 percent of the market compared to Publix's 29.8 percent and Walmart's 28.6 percent.

Winn-Dixie's strategy isn't unique. Publix and Kroger Co. (NYSE: KR) are mainstream grocers that have succeeded in taking market share from specialty grocers by adding upscale touches to their stores.

And though Whole Foods Market Inc. (NASDAQ: WFM) has struggled in recent months, other specialty grocers like Trader Joe's have upped the ante for mainstream stores like Winn-Dixie. And there's more to come: Sprouts Farmers Market (NASDAQ: SFM) is zeroing in on a South Tampa site for its first store in Florida.

On the other end of the grocery spectrum, discount grocers like Aldi and Lidlalso present a competitive threat, offering a small selection of private label products. Winn-Dixie is trying to compete on that front, too, launching an aggressive price-cutting campaign in January.

“We believe in eating well for less,” McLeod told the JBJ. “This means that while we are offering quality food, customers will not be paying more for their basket. Since October last year, we have invested over $70 million into lowering our prices. We now have over 3,000 new lower prices and over 600 products on Down Down — prices that are down and staying down.”