COVID has proven to be chaos for grocers facing a surge in demand for at-home staples from toilet paper to yeast.
For Winn-Dixie parent company Southeastern Grocers, the pandemic meant a new wave of shoppers and an opportunity to prove itself a changed brand.
Since the company emerged from bankruptcy in , CEO Anthony Hucker has pledged to revitalize its supermarket chains. The company has since shredded unprofitable locations, bought several new stores and grown its digital footprint. But we really are a people-first organization. And we just found out that we have been certified as a Great Place to Work, which is a tremendous achievement.
Great Place To Work is an analytics firm that uses employee surveys to build lists of best workplaces, including for Fortune magazine. When we declared that ambition three years ago, I think there were some people who kind of laughed, but we were just certified last week. We have purchased nine new stores this year alone.
There are not too many retailers that are buying new stores. With our mobile apps, we have nearly 2. And the loyalty program and promotions have really exceeded our annual goals. So customers with the app tend to spend more with us. The last point is, more than half of our stores have been remodeled or renewed. It sounds like your stores have seen what every grocer has during the pandemic: an increase in demand.
We happen to be very good at disaster relief. There have been four Category 5 hurricanes in the Atlantic basin over the past five years. So we have built a very strong muscle when it comes to disaster. The difference between a hurricane and a pandemic is that the hurricane comes and goes.
Want more of our free, weekly newsletters in your inbox? We define it in four stages: panic, lock down, recovery and the new norm. We have a very strong adversity quotient. Food at home, fitness at home, education at home and cleaning are four industries you might not have talked about so much in the past. How does dissolving the BI-LO brand fit into the strategy? What does it mean for your other brands? Earlier this year, we announced a market shift, and that was the dissolution of the BI-LO banner and emphasis on our core markets.
The investments in the remaining footprint have generated significant return. Davis, his wife, and their four sons ran the store; the Davis family has provided the leadership for Winn-Dixie ever since.
In the early years Davis found it difficult to expand. Three times he attempted to open a second store and three times the store failed. Chain stores had demonstrated their ability to deliver a wider variety of high-quality goods at lower prices than had ever before been possible, but many a tradition-bound consumer preferred the old way of doing business. Independent grocers had local support and political connections, but life could be made rather difficult for a chain-store or supermarket operator.
After consumers' initial resistance was overcome, however, it was impossible to deny that supermarkets were the wave of the future. By , the year W. Davis's four sons took control of the company at their father's death and set out on a course of further expansion.
The war years brought a lull in the supermarket industry. Food rationing, labor shortages, and price increases forced supermarkets to tighten their belts with the rest of the nation. During this time nonfood products filled what would otherwise have been empty shelves, and began to assume a more prominent place in supermarkets.
The higher profit margins on nonfood products allowed supermarkets to maintain food prices at relatively low levels without jeopardizing overall profitability. With this merger, Winn-Dixie broke into the top 10 supermarket chains and from the mids through to the mids was the most profitable company in the industry.
Profits in the supermarket industry are more dependent on high volume than high profit margins, but Winn-Dixie's profit margins in this period were exceptionally high. This was due to both an increase in sales fourfold between and and lower labor costs in the nonunion South. Winn-Dixie not only acquired more retail outlets but also branched out into processing, manufacturing, and distribution, producing a wide variety of store brand products from these support facilities.
With profits increasing each year and with 23 consecutive years of cash dividend increases, chairman J. Davis one of W. Davis's sons could confidently predict in the Wall Street Journal in that Winn-Dixie would shatter all previous sales and profit records in fiscal The year also brought some bad news, however. The Federal Trade Commission had been investigating the increasing concentration in the supermarket industry and had concluded that mergers and acquisitions in the industry had unfairly limited competition, in violation of the Clayton Anti-Trust Act.
Winn-Dixie, as the most profitable and one of the fastest-growing chains, was an obvious target. The investigation showed that, in fact, a third of Winn-Dixie's increase in sales over the previous 10 years had been generated by stores acquired during that period. The ruling was not as much a punishment of Winn-Dixie as it was a settlement between the firm and the FTC. Thomas told the Wall Street Journal at the time, "is to clear all Winn-Dixie's past mergers and acquisitions from future challenge.
Winn-Dixie used the year period for "internal" expansion, adding stores by leasing new stores and improving existing retail and support facilities. When the ban was lifted in , Winn-Dixie acquired the stores and the support facilities of Kimbell, Inc. The stores in New Mexico, which were unionized, posed a problem for the traditionally nonunion Winn-Dixie.
After the company refused to negotiate with the union and a pro-union boycott began, Winn-Dixie sold its New Mexico stores in In J. Davis stepped down as chairman of Winn-Dixie, and a member of the third generation of the Davis family, Robert D.
Davis, assumed control. Robert's five years at the helm were marked by a virtually flat rate of growth in gross profits, although net earnings did not suffer because of lower tax rates. Winn-Dixie has faced increasing competition in the s, not only from its traditional competitors--the other large chains--but also from convenience stores, which have made a large dent in the market. In Robert stepped down as chairman but remained vice chairman and his cousin, A.
Dano Davis, was elected to succeed him. Dano Davis's new management team implemented measures to cut operating costs and raise gross profit margins. Management costs were also pared, and 60 management positions were eliminated. Winn-Dixie began selling off its smaller, less efficient stores and also unloaded some of its less productive baking facilities. The prevailing trend was toward larger, more modern stores offering more merchandise.
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