business news in context, analysis with attitude

by Kevin Coupe

Late last month, I took note of a story in the Daily Record about how Winn-Dixie has “embarked on a program to ‘transform’ selected stores among the 484 it operates in the five states of Florida, Georgia, Alabama, Mississippi and Louisiana ... The transformation is focused on fresh fruits, vegetables, meats and seafood along with freshly prepared foods and specialty stations, as well as a wine area. The store features higher ceilings, wood and polished concrete floors and improved shelving ... The stores are renovated floor-to-ceiling at a cost of about $5.5 million, almost triple the average renovation cost of $2 million. The changes result in increased sales, which Winn-Dixie has said reach an average $475 per square foot, a 60 percent increase from the average $300 at its other stores.”

And, I commented:

According to one Winn-Dixie official, these transformations are seen as a stepping stone to the future. But I can’t shake the feeling that there are those who hope that improved performance actually will put Winn-Dixie on the fast track to an eventual sale, that it is just a matter of time before the company is either sold or broken up.

How long has Winn-Dixie been trying to transform itself? It seems like forever ... but then again, maybe I’m just getting old and cranky.

Well, there were some folks at Winn-Dixie who took exception to my characterization, who felt like I was underestimating their efforts ...and who agreed that I was being unnecessarily cranky. I was invited to visit one of these new “transformed” stores whenever it was convenient to me ... and, as it happened to be convenient pretty quickly.

The 50,000 square foot Winn-Dixie that I visited was in Apopka, Florida, and I have to admit that it was one of the nicest Winn-Dixies that I ever have seen. It is one of 17 that the company plans to open this year.

Not surprisingly, the strongest part of the store was the fresh food power alley upon which the front door opens - the produce is displayed with a colorful farm stand-style panache, and there is a nice prepared foods section - complete with an on-location chef - that is selling pizzas, pastas and a good selection of hot meals. (Center store remains center store ... though there has been a concerted effort to widen the aisles and lessen the clutter.)

It seems clear from some of the discussions I had that Winn-Dixie is looking to exhibit a Publix-level food expertise, which is an ambitious goal ... and the argument that this is a long-term play for Winn-Dixie is persuasive.

I was particularly impressed by the chat that I had with Henry Ferris, the company’s new senior director of brand management - a title that seems in itself to be a statement about Winn-Dixie’s intentions to be seen not just as a carrier of other brands, but a brand unto itself. Ferris is not one of the usual suspects ... his resume has both Sears and Home Depot on it (during the good times at the both places), and he seems willing not just to consider traditional answers to the challenges facing Winn-Dixie. I’m told by others within the organization that this approach is typical of CEO Peter Lynch, who is said to realize that traditional approaches may not provide Winn-Dixie with a sustainable long-term strategy.

That’s all well and good. I’m persuaded that the executive team at Winn-Dixie isn’t just getting the place ready to be sold. (Which probably means that it’ll get sold to somebody next week.) I’m not sure I buy the idea that it makes sense to compete with Publix, which has some of the most loyal customers in the business. And even if Winn-Dixie is successful at moving more up-market, it runs the risk of disenfranchising its core consumers, something it cannot afford to do.

For the time being, though, I’m going to try to be a little less cranky when I consider Winn-Dixie and its future. But the game is hardly over, much work remains to be done, and there will be no dearth of events and competitors that will challenge the company.

And that’s not just whistling Dixie.
KC's View: