Major Chains Closing Stores – Sweetbay Supermarket – California – 8/16

Sweetbay Supermarket

• The Sweetbay Supermarket chain will close all 17 of the stores it operates in the Tampa Bay area, The Herald Tribune newspaper reported. Many of the stores might open as Winn-Dixie Stores. Sweetbay closed 33 stores in Florida last year.

The local grocery store wars chalked up another casualty as Sweetbay Supermarket announced it will shutter 33 stores, including 22 in the Tampa Bay area.

The decision disappointed loyal customers but came as little surprise to industry analysts who have watched Publix and Walmart solidify their stranglehold in this market.

Sweetbay’s Belgian parent company, Delhaize Group, said the move to close a third of its Florida stores was needed to improve its U.S. results and strengthen its bottom line after a difficult year. About 2,000 employees will lose their jobs, including about 1,200 locally.

“These 33 stores were under-performing stores,” said Nicole LeBeau, spokeswoman of Tampa-based Sweetbay. “We are a publicly held company, and we have to be responsible to our shareholders.”

The closings, effective mid-February, include six in Tampa and three in St. Petersburg. Competition from heavyweights Walmart and Publix and relative newcomers including Aldi and Target proved too much to support so many Sweetbays, officials said.

“The grocery industry in this market is extremely competitive,” LeBeau said. “As low as our prices were and as good as our stores looked, it’s been a challenge. We hope we can continue to get people in our 72 stores and keep them successful.”

For many industry analysts, the announcement late Wednesday was significant but not shocking. Sweetbay, like Winn Dixie, Albertsons and other traditional regional grocers, has struggled in recent years to stand out amid the growing competition. Walmart, Aldi, Save A Lot and other discounters got the attention of bargain shoppers during the recession. Upscale grocers such as Whole Foods and Fresh Market lured customers focused on health and the environment.

“It’s well known in the industry that (grocers) in the middle struggle more than those at the high end or the low end,” said Lorrie Griffith, editor of the Shelby Report, a monthly grocery trade publication.

Publix holds the lead in market share for Central Florida, followed by a fast-gaining Walmart, Winn Dixie at a distant third and Sweetbay fourth. Combined, Publix and Walmart grab nearly 70 percent of grocery dollars.

Sweetbay’s cuts reflect the “Walmartization of the grocery wars,” said Bob Messenger, a grocery store analyst who publishes the Morning Cup, a daily online newsletter for food industry leaders.

“We’re beginning to see Walmart taking a big chunk of the grocery business from players like Sweetbay,” he said. “I don’t see that changing in the near or long-term future.”

He also doesn’t see Sweetbay rebounding after the consolidation. “I think Sweetbay is going to be in trouble no matter what.”

The closures come amid tumultuous times for Delhaize, which operates more than 1,500 supermarkets in 16 eastern states under the brands Sweetbay, Bottom Dollar Food, Food Lion, Harveys, Hannaford Supermarkets and Reid’s.

In the past month, Delhaize’s U.S. division based in North Carolina has cut several top-level positions as part of a major restructuring to reduce costs and reinvest the savings in stores. It also named Brad Wise president of Sweetbay and Hannaford brands, replacing Mike Vail, who helped lead the 2004 transformation of Kash n’ Karry stores to the more upscale Sweetbay. Vail now serves as chief supply chain officer for Delhaize America.

Last January, the company announced that it was closing 113 under-performing Food Lion stores, including 20 in the Jacksonville area. Delhaize’s latest earnings report released Thursday showed sales for its U.S. stores dropped 2.2 percent last year to $18.8 billion.

Sweetbay’s shedding of stores will likely create opportunities for new stores to come into the market, such as Kroger, said Steven Kirn, executive director of the Miller Center for Retailing Education and Research at the University of Florida. It probably will have minimal impact on Publix, which will continue to focus on customer service.

“I don’t think (Publix) was losing any sleep over Sweetbay,” he said. “I think they will try to grab market share and really dominate. They won’t try to compete with Walmart, though, because they can’t based on their business model.”

Commercial real estate expert Patrick Berman estimates the Sweetbay stores will quickly convert to other uses. Sweetbay rents its locations and many of the soon-to-close stores were either up for a lease renewal or nearing it.

“The good news is that they have good real estate,” said Berman, a senior director at Cushman & Wakefield of Florida in Tampa. “They have good access, good visibility, good signage and they are a size that can accommodate a lot of other uses.”

Although the addition of empty big boxes could decrease rental rates, he expects it won’t last for long. Both retailers and non-retailers are looking for mid-size space in prominent locations, he said, citing Walmart neighborhood stores, Marshalls, Ross, Hobby Lobby, Big Lots and LA Fitness as a few examples.

“There will be a bit of a feeding frenzy,” he said. “Look at how fast the Borders stores got snatched up.”

Publix spokeswoman Shannon Patten said the company continually looks for new sites and is exploring its options relating to the Sweetbay stores. But no decisions have been made. Publix, with more than 760 locations in Florida, encouraged Sweetbay employees to apply for jobs at their stores.