AL-DIxie? - Thoughts on the Winn-Dixie Acquisition from Your Southeastern Retail Bloggers

ALDI to Acquire Winn-Dixie and Harveys Supermarket to Continue Growth in the Southeast

For additional news regarding the ALDI acquisition of Southeastern Grocers, read the updated post here.

Acquisition to add approximately 400 stores and expand access to great products at the lowest possible prices

BATAVIA, Ill., August 16, 2023 – ALDI today announced it has entered into a definitive agreement to acquire Winn-Dixie and Harveys Supermarket as part of a larger divestiture of Southeastern Grocers to various entities. The acquisition continues the growth of ALDI, expanding its ability to serve the region with great products at the lowest possible prices.

“Like ALDI, Winn-Dixie and Harveys Supermarket have long histories and many loyal customers in the Southeast and we look forward to serving them in the years to come,” said Jason Hart, CEO, ALDI. “The time was right to build on our growth momentum and help residents in the Southeast save on their grocery bills. The transaction supports our long-term growth strategy across the United States, including plans to add 120 new stores nationwide this year to reach a total of more than 2,400 stores by year-end.”

Despite many retailers shuttering stores due to economic conditions, ALDI is doubling-down on expansion plans, supporting its position as one of the fastest-growing grocers in the country. The Southeast-focused acquisition includes approximately 400 Winn-Dixie and Harveys Supermarket locations across Alabama, Florida, Georgia, Louisiana and Mississippi.

“This merger agreement is a testament to our successful transformational journey and the tireless work of our dedicated associates who serve our communities,” said Anthony Hucker, President and CEO, Southeastern Grocers. “ALDI shares our vision to provide exceptional quality, service and value - and this unique opportunity will evolve our business to benefit our customers, associates and neighbors throughout the Southeast.”

The transaction will bring together three trusted brands that share a long-standing commitment to
delivering an exceptional grocery experience and making a positive impact in the communities where they operate. ALDI first established its presence in the Southeast in the mid-1990s and since has invested $2.5 billion in the region. Most recently, ALDI deepened its roots in the region, opening its 26th regional headquarters and distribution center in Loxley, Alabama to help support new stores, with plans to open 20 new ALDI locations in the area by the end of the year. Southeastern Grocers established its presence in the region nearly a century ago. From the beginning, its commitments to the customer, caring associates and quality products have made a profound impact in the Southeast.

“ALDI will operate Winn-Dixie and Harveys Supermarket stores with the same level of care and focus on quality and service, as we also evaluate which locations will convert to the ALDI format to better support the neighborhoods we’ll now have the privilege of serving,” added Hart. “For those stores we do not convert, our intention is that these continue to operate as Winn-Dixie and Harveys Supermarket stores.” 

A Certified™ Great Place to Work® and one of Forbes’ America’s Best Large Employers, ALDI will bring its employee-focused culture and above-industry-average store associate wages to more markets in the Southeast. Like Winn-Dixie, ALDI has many loyal customers, with accolades such as being named the #1 in price for the sixth consecutive year* and a top 10 most sustainable grocer**. 

Deutsche Bank served as financial advisor to ALDI. Baker & McKenzie LLP was transaction counsel to ALDI and Kayne Law Group served as real estate counsel to ALDI. The transaction is expected to close in the first half of 2024, subject to regulatory approval and other
customary closing conditions.

About ALDI

ALDI is one of America’s fastest-growing retailers, serving millions of customers across the country each month. Our disciplined approach to operating with simplicity and efficiency gives our customers great products at the lowest possible prices. For six years running, ALDI has been recognized as No. 1 in price according to the dunnhumby Retailer Preference Index Report.* ALDI strives to have a positive impact on its customers, employees and communities by being socially and environmentally responsible, earning ALDI recognition as a leading grocer in sustainability**. In addition to helping protect the planet, ALDI helps customers save time and money through convenient shopping options via in-store, curbside pickup or delivery at shop.aldi.us. For more information about ALDI, visit aldi.us.

*According to the dunnhumby® ©2023 Retailer Preference Index.

**According to Progressive Grocer’s 2023 Top 10 Most Sustainable Grocers list.

Contact:
Zeno Group
ALDIPR@zenogroup.com

Official Aldi press release - August 16, 2023

I typically don't begin a post with a press release, but special circumstances call for special measures.  Several days ago, many of us were awakened to the news that Aldi had entered a deal to purchase the Winn-Dixie and Harveys brands as part of the dissolution of Southeastern Grocers.  The Sing Oil Sidekick summarized the news well:  "Oh my gosh! I thought it was April Fool's at first!"  

I certainly had to check (and double check) my calendar when I saw the announcement, and this reaction seems like a common thread for most of the people I have discussed the matter with.  Considering it is hot as you-know-what outside, I quickly realized that we are not, in fact, in the month of April.  Furthermore, this announcement has much broader implications than a press release for Check Soda perfume, thus it appears that I am not in a delusional slumber and the news is in fact true.  So what does this mean for both companies?

Well, I can't say anybody is entirely sure.  I'd have to imagine this has been in the works for some time now considering rumors began to circulate last year that Southeastern Grocers was exploring a sale.  This information came on the heels of an aborted 2020 IPO worth an estimated $500 million which would have brought the company to the New York Stock Exchange under the ticker SEGR.

Private equity has owned the conglomeration for over a decade now and has made it clear they would try all sorts of methods revive the ailing supermarket.  Since Winn-Dixie's 2005 bankruptcy, the brand has been drug through all sorts of mud including an additional bankruptcy along with countless restructurings, mergers, selloffs, and conversions.  Like I've said before, I've considered The Beef People as having one foot in the grave for what seems like eons now.

Winn-Dixie #169 - Bainbridge, GA - 2022 - Sing

Following on the heels of the large bankruptcy-fueled 2018 closure round and a 2020 divestiture, I didn't think the company would be able to survive another five years—that is until I stepped back into Winn-Dixie #3 in late-2021.  

Winn-Dixie #3 - Monticello, FL - 2023 - Sing

I was flabbergasted at what I saw:  a 1970's store that previously looked like it had not been touched since The Golden Girls originally aired now felt like a modern supermarket I would actually enjoy shopping in.  This revelation inspired me to document the subject of my MFR debut post, Winn-Dixie #168 in Chiefland, FL, before it met the previously unthinkable fate of a full remodel like its sibling to the North.  Before I knew it, nearly every Winn-Dixie I visited began to look like a Winning Wonderland until I realized that the formerly beleaguered company was down to seven stores with the iconic Marketplace interior (and that result wasn't entirely from store closures).  

Winn-Dixie #445 - Inverness, AL - 2023 - Sing

This remodel spree also wasn't like previous ones we saw where Winn-Dixie would release a flashy new prototype store and follow through with only a handful of subsequent stores—they meant business this time.  Now, even the fancier locations like the Transformational Stores were up for remodel which really showed how Southeastern Grocers was on a mission to right the ship and create a whole new image in public opinion.

Winn-Dixie #7 - Jacksonville, FL - 2023 - Sing

I remember discussing with AFB that the 2020 sale of stores to Ahold-Delhaize may have actually been a good thing for Southeastern Grocers, as it provided an influx of cash to fuel one of the most shocking remodel campaigns I've witnessed.  As evidenced by stores like #7 on Baymeadows Road in Jacksonville, the company has put forth some very nice prototypes in the past, but ****cheapened out*** when it came to following through with the plan.  They couldn't just go halfway if they really wanted to turn the brand around from all of the tired stores people had come to expect.

Winn-Dixie #7 - Jacksonville, FL - 2023 - Sing

In the end, it seems that some of these recent efforts may have been part of a calculated exit strategy for the investors.  Rather than running the race to the bottom like many other retailers, it seems that SEG wanted to see if they could tidy up stores, and opinions, and sell a leaner, sounder company for a profit.  Several years ago it was announced that Winn-Dixie would remodel all of its remaining stores by the end of 2023, and that target date seems like it may have been more than a coincidence . . .

Now that we have a little background information, let's see what some of my friends have to say about this topic.  Without further ado, I'm going to pass the figurative mic out to the crowd for our little Q&A session.

- The Sing Oil Blogger

 

 Are you surprised by this announcement?

Albertsons Florida Blogger:

Am I surprised SEG sold out? That, no. I read rumors that SEG was exploring a sale, and when being owned by private equity, typically the investors will look to sell out when the time is right to make a nice profit. Was I surprised the buyer was Aldi? Considering I had to do a double take when I first saw that headline - yes, yes I was surprised! I had always thought SEG was trying their darndest to court Kroger as their buyer - never would I have thought Aldi would be the winner! 

Sing Oil Blogger: 

Yes, very much so!  While I'm not surprised that SEG found a buyer, I never suspected it would be Aldi—that seemed to completely come out of left field.  I was expecting to hear somebody like Ahold-Delhaize or Kroger-Albertsons had made a deal with the chain and not the German discounter.

Sing Oil Sidekick:

As my "April Fool's" quote above obviously indicates, I was very shocked by this news. I'll agree with AFB, not surprised in the least that SEG sold out to someone, but very surprised by who the buyer is. I am a huge Aldi die-hard (S.O.B. can attest!), but I have never heard of Aldi U.S. doing any kind of acquisition (feel free to correct me in the comments if this is untrue!). If Aldi were to acquire a competitor, I would picture it being a brand with primarily smaller footprint stores such as Lidl (which bears many similarities to Aldi including selling mostly store brands, being a German company, and investing heavily in a Southeastern expansion).

Retail Retell:

Very much so! I can appreciate that, as they naturally are the best, my responses were saved for last (ha! Major joke there – in fact, I’ve held up the entire post from being published any sooner…), but an unfortunate downside of being the final commenter here means that I don’t have very many original thoughts to add that weren’t already expressed above. Like everyone else, I was fully expecting SEG to sell at some point, but in no way was I expecting Aldi to be the buyer – and also, I am rather surprised at how much of a surprise the news was in and of itself (that is, no whispers or lead-up to it, at least none that I saw – it came just all of a sudden, right of the blue!)

Do you think this merger makes sense?

AFB:

Winn-Dixie and Aldi seem like total opposites, but thinking about this deeper I can see potential synergies between the two - Winn-Dixie wants their angle to be price when competing (which the current ad campaign likes to throw around), and Aldi's expertise is on price. Aldi also finished a total refresh campaign of the entire chain to come across as more modern and trendy, and WD is doing that at the moment too. That said, I would have never guessed Aldi would have had any interest in buying Winn-Dixie prior to seeing this news the other day, but it will be interesting to see how this unfolds, being that Aldi has never run a traditional grocer before.

Sing:

The more I think about it, the more sense this deal makes to me.  To some, it may seem like an over-priced speculative land-grab for Aldi, but I think the company has more to gain here than strictly real estate.  As many have mentioned, they could have bid on countless vacant big-box stores if they just wanted real estate, but there is something to be said for buying a business that is already running and seems to be reporting its best financial numbers in decades.  For Aldi, this provides the chance to more directly take on full-line supermarkets who previously discounted the chain as nothing more than an annoyance, while also using its savvy pricing to position Winn-Dixie as a lower price but adequate service competitor.  While the new Winn-Dixie probably won't take much business away from Publix, I suspect the chain could steal back loads of business from Walmart (which is currently the only other grocer in many areas Winn-Dixie serves) while potentially giving the chain the momentum to take on a distracted Kroger in Georgia and Mississippi.  Like AFB alluded to, this experiment for Aldi could either go really well or turn into a massive financial boondoggle; the company isn't particularly well known for its acquisitions, after all. 

Sidekick:

Time will tell if this merger makes sense. On one hand, this does provide Aldi with an easy way to expand their footprint in the Southeast. I'm not well versed in corporate economics or acquisition deals, but I imagine that the fact both companies are privately held made sense more than Aldi taking a publicly traded brand private. On the other hand, Aldi's meteoric rise in the Southeast seems to be working well enough so far, and their small format and reduced SKU offering seems designed to do well in smaller markets (see also, Dollar General). I wonder if the SEG acquisition is unnecessary because Aldi could likely have success with their current expansion formula in their target markets without having the cost of buying stores in markets where there is already an SEG and Aldi, sometimes on the same road! Examples of this include Columbus, GA; Prattville and Wetumpka, AL; etc. 

Retell:

Maybe? Putting aside the whole “who knows what will actually come of this” stuff for a second, and going strictly on business sense with the knowledge that we don’t know what Aldi has in mind: Aldi has been expanding like crazy in the US and seems to be doing well, so I have to imagine they know what they’re doing. I don’t just throw out that phrase about any company, mind you… and that doesn’t mean that this venture won’t end up failing, either. But based on their past performance, I am inclined to believe that they have their reasons for the merger, and intend to see it through to success (in whatever format that may take).

What do you think Aldi's long term plans are the Winn-Dixie and Harveys brands?

AFB:

Winn-Dixie has a lot of potential as a brand after its successful turnaround, so I could see Aldi letting Winn-Dixie continue on as a semi-autonomous entity. I think Harvey's is done for, as the Harvey's stores seem to be some of SEG's weakest remaining links, and Aldi will probably target SEG's most unprofitable locations for conversions to the parent brand.

Sing:

I agree that Winn-Dixie has a lot of potential, and I hope Aldi will use that to its advantage and keep the brand as a separate entity.  I wouldn't be surprised if, at a minimum, Aldi incorporates some of its house brands into Winn-Dixie stores and turns the "Dollar Shops" into Aldi Finds sections.  As for Harveys, as sad as it is, I think Aldi will end up killing off the brand.  Currently, Harveys seems like a wet rag that companies would pick up, wipe around, then throw back on the floor.  While Delhaize used the name to shore up its remaining Southern Food Lion stores, SEG really took it for a ride and essentially distanced it from being the humble local grocery store many rural towns depended on.

That being said, what I hope is vastly different from what I fear.  Jason Hart, CEO of Aldi, was quoted by CNN as saying that a "significant amount" of Winn-Dixie and Harveys stores would be converted to the Aldi format over the coming years.  Every article that I've read continues to emphasize that all Harveys and Winn-Dixie stores won't be gong away, but that thought is still very frightening.  What would be even worse is how towns like Bainbridge, GA, Chiefland, FL, and Eufaula, AL,would be left without their primary full-service grocery store, and towns like Madison and Monticello, FL, would only be left with with small independents (I'm sure who would love for this to come true).

Retell:

Well, like everyone else is saying (and as is covered in a bit more detail in a later question), it doesn’t seem to make a whole ton of sense to think that Aldi bought the company only for its real estate, to convert the existing locations into regular-format Aldi stores and lease out all the excess downsized square footage for extra cash. There’s no shortage of Aldi-sized empty retail spaces out there these days, and that’s not even taking into consideration the fact that Aldi very commonly will buy up land and put up its own store, too (at least in my part of the country)! So, with that in mind, I legitimately think that Aldi may well be attempting a push into some form of a full-scale supermarket business, or at the very least a hybrid type of model. From that perspective – I think Winn-Dixie has a good chance of survival. Harveys… probably not so much, for the same reasons everyone else has mentioned above. Sorry, Harveys.

Do you think the Winn-Dixie name will survive until its centennial in 2025?

AFB:

I think so. It's been stated that Aldi is converting some locations, not all. Even if the worst case scenario happened and every store converted, it would probably take Aldi a lot longer than a year to convert everything.

Sing:

I think Winn-Dixie will still be around until at least 2025.  Not only will it take several months for the deal to close, it would also take a while for the worst case scenario of all stores converting to happen.  Furthermore, I think the Winn-Dixie name has valuable brand recognition (considering I can walk up to people who aren't from the Southeast and can still tell me what it is), that I think Aldi would be stupid to let go to waste.

Retell:

This is a really great question and adds a rather complex, if obscure, layer to this whole situation (in my opinion). Business decisions like this fascinate me, given all the various options at hand. For instance: if they ditch Winn-Dixie immediately, wouldn’t that kind of taint the whole merger, assuming Aldi is indeed trying to build up a full-scale supermarket presence? If they cut off the name immediately, and just stick their own up there, they risk customers not yet knowing to expect a full supermarket instead of just a regular Aldi (which, furthermore, would disappoint said customers, who are expecting to find their usual Winn-Dixie fare). And – if they wait until after the centennial, celebrate the whole thing, lots of fanfare, yada yada – only to ditch the brand at that time, surely that would be viewed with negative press as cutting off the brand’s life right after it turned 100, superficial and uncaring! But, Devil’s Advocate – let’s play best-case scenario here, and the whole full-scale supermarket thing takes off, with Aldi expanding it nationwide (which I believe may very well be the whole point of the arrangement, looking long-term). What, really, would the reaction be if something called “Winn-Dixie” began expanding its footprint across the country again? While I concede that the brand does have name recognition – is that recognition particularly positive, in all cases? Especially in parts of the country that WD retreated from, long ago, and had a reputation for being not necessarily the best grocer (to put it mildly)? If Aldi truly does want to build up a national footprint of actual supermarkets, and not just regular Aldi stores… I’m not so certain that Winn-Dixie is the brand to do that under.

Sing (again):

I couldn't resist a short reply (it helps when you are one of the proofreaders)!  I was in Louisville several months ago when Winn-Dixie came up in a conversation with some locals (shocker).  They remarked something to the effect of, "oh yeah, I seem to remember that chain," with a sense of nostalgia rather than a sense of disgust.  I totally agree that Winn-Dixie has a decent amount of baggage attached to it as well, but I'd be curious to see how fast those vague negative memories could fade away . . .

AFB (again):

In response to Retell and Sing's replies above (as it helps when being a secondary proofreader), I have to add that so many people comment on Winn-Dixie's Facebook page to "come back to [insert city in GA, NC, SC, KY, TN here]". I think a lot of people in those outer regions Winn-Dixie retreated from in 2005 were extremely unhappy Winn-Dixie left. Even if the stores in those areas were small and old, people seem to have a more positive connotation of Winn-Dixie's time in those areas than a negative one. It's an interesting thought that Aldi could use the Winn-Dixie name for a larger-format store nationwide, possibly to better penetrate the Southeast, although I don't know how well it would work using the Winn-Dixie name in a totally unknown area like Minnesota or Nebraska.

Do you think this was just a play to get sought-after real estate?  Phil Lempert from Forbes states, "As most of Winn-Dixie’s locations are leased, it would be a no-brainer (and possibly a profit center) for Aldi to cut the footprint in half and sub-lease out the remaining footage."

AFB:

Outside of the heart of some very urban areas, real estate isn't scarce here - especially for a building the size of a typical Aldi. Also, there are plenty of empty Bed Bath & Beyond, Office Depot, and other "category killer" boxes out there that Aldi is also known to take over too. If Aldi really wanted some SEG stores just to convert them, they probably could have made a deal to buy a select group of weaker stores from SEG. By buying everything, I feel Aldi has some deeper plans than just trying to blanket Florida with 400 new (and sometimes redundant) stores.

Sing:

It seems like it wouldn't make financial sense for Aldi to buy WD just for the real estate.  Although they could get 400 new locations in one fell swoop to subdivide, this deal, however much it costs, still seems like it would be too expensive to do such a thing.  Unlike Publix' 2008 Albertsons acquisition, Aldi stores aren't exactly a direct shoe-in for a Winn-Dixie.  I also think an Aldi taking over a newly-remodeled Winn-Dixie would lose out on a lot of potential revenue provided by the extra SKUs and thus, extra shoppers.   Many people like to shop at one store to complete their whole grocery list for the week, and that often isn't possible at Aldi.

Retell:

Well, I kinda jumped the gun on this question a bit, but, short answer – no, I don’t. Or, at least, it would be stupid if it was. Which is why I am inclined to believe it wasn’t. Going back to my “I don’t just throw out that phrase about any company” comment from earlier – a comparison that comes to mind is the Chick-fil-A that was built recently in Greenville, MS. I have a lot of history with Greenville, and I and everyone else I know finds that decision to be 100% crazy. But – based on their track record – I trust Chick-fil-A’s business sense. I do not believe that they would build a brand-new, ground up location in the 2020s if they even remotely anticipated that business to fail. Similarly, it makes the most sense to me to believe that Aldi has something else up their sleeve besides just a simple real estate ploy when it comes to this merger. There are way too many other, easier options on the table for simple expansion of their existing business for them to have selected this one as the route to achieve that goal.

How do you think merchandising will differ in stores currently operated by SEG?

Sing:

SEG just announced a new house brand, Know & Love, that seems like it was part of the preparation for this deal.   The timing on this seems too coincidental for it to not be Aldi's plan to use this in stores; furthermore, I was in a Winn-Dixie earlier this week and saw no sign of the new house brand.  I also wouldn't be surprised if other Aldi merchandise made it into Winn-Dixie stores, but I doubt The Beef People would be able to drop national brands or their famous Chek Cola.

Sidekick:

As a long-time Aldi fan (over 10 years now!), I am certainly no stranger to private labels, and I think having repeat customers and a quality product can build some brand loyalty even without advertising. For example, Aldi's Barissimo brand coffee is my go-to for my morning cup of joe. Their stylish packaging and low prices got me in the door, and the quality of the product kept me purchasing it into the future. I personally "love" the look of Know & Love brand (I guess they achieved their goal!) and would hate to see such a modern and stylish investment go to waste. I also find it strikingly similar to Target's "Good & Gather" brand. Although I am skeptical this brand would backflow into Aldi stores, I hope Aldi keeps it in the former SEG stores. I also personally love the Aldi Finds section (aka the "Aisle of Shame") and hope this is represented in the SEG stores. Similarly, I wouldn't be surprised to see some of Aldi's cult-following products represented in SEG stores such as the famous "Red Bag Chicken" (it has its own fan group) and even some sarcastic and self-aware Aisle of Shame merch like this sign that references RBC. One difference I expect to see is the continuation of more brand-name products beyond Aldi's ~10% representation of branded products, and hopefully the preservation of the service departments such as the bakery and butcher. And it's a toss up if WD will get Aldi's famous quarter carts. Anyone up for a WD-themed quarter keeper?

Retell:

Since I don’t have a Winn-Dixie near me to know what merchandising is currently like, I don’t know that I have the best answer here – but I doubt it would change all that much. Again, Aldi is very much a discount grocery store, and Winn-Dixie is very much not. These decisions will rely heavily on what route Aldi intends to take with the Winn-Dixie stores, but if my theory is right that Aldi is interested in running a full-scale supermarket, I don’t really see where they can toy with the recipe all that much.

A quick comment from AFB:

Just to touch on one of Sing's comments above, I have noticed the first Know and Love item to be rolled out: favored woodchips for a smoker/grill. I've been to 3 different Winn-Dixies over the last week and all of them had an endcap with the Know and Love woodchips on them, and one store had a decal on the floor under the endcap to specifically advertise the new woodchips. I've yet to see any other Know and Love products roll out yet (and why flavored woodchips were chosen as the first item is beyond me), but Winn-Dixie has been unusually quiet about the rollout of Know and Love, and besides a somewhat hidden page on the website (which Sing linked to above) and the woodchip endcaps, Winn-Dixie isn't making a big deal about the rollout, which I find odd, as the introduction of the SE Grocers brand came with much more fanfare.

The Know and Love woodchips that have been rolling out in the last week or two - AFB

Most Winn-Dixie stores range from 40,000-50,000 square feet; do you think Aldi will experiment with some larger-format stores under the primary banner?

AFB:

Probably not - Aldi's namesake format is very calculated and formulated. If Aldi wants to experiment with anything bigger, it will probably end up branded as a Winn-Dixie. 

Sing:

I agree that we probably won't see bigger Aldis; however, part of me wonders, despite what I said earlier, if Aldi won't try to launch a "Super Aldi" under the Harveys brand.  Never in a million years do I think this will actually happen, but Retail Retell's point about the Winn-Dixie name being a bit tarnished makes me wonder if Aldi could try something on a larger scale under the (outside South GA and North FL) blemish-free Harveys banner.  After all, everyone who has owned the chain before them has taken it to places it probably never should have been.  One redeeming factor out of all of this could be that we finally get to say good riddance to the abomination of Yellow Down Down!

Sidekick:

No, that would involve Aldi expanding their SKU count exponentially which runs counter to their whole operating philosophy. Any larger format will probably remain WD. I imagine any WD store that converts to Aldi will be reduced in size and the remaining space subleased to another tenant.

Retell:

If you mean bigger versions of existing Aldis – no. If you mean larger stores that are different from the existing Aldis but are tied to the parent company in name – see my previous responses.

Do you think existing Aldi stores will change at all following the acquisition?

AFB:

Probably not - again, like I said, Aldi's traditional format is well calculated and rarely altered. I can't see Aldi adding service departments or changing the product selection, or any other dramatic changes. At most, maybe Chek soda will end up being sold at Aldi. 

Sidekick:

No. Aldi is the most standardized grocery store brand I have experienced with minimal variation between locations. I don't see them messing with this winning formula. The only change I could see is the possible use of a few SEG brand assets on private-label Aldi products where they don't already have a fan following. "The Beef People"-branded ground beef, anyone?

Retell:

Nope – like everyone else says, they’ve got a good thing going. Just like it would be stupid for Aldi to have bought Winn-Dixie just for the real estate, it would also be stupid for them to mess with their existing locations, outside of possible brand integration like AFB and the Sing Oil Sidekick mention.

¿Qué opinas sobra Fresco y Más?

AFB:

Fresco y Más fue muy exitoso para SEG, según informes publicados. Sin embargo, Fresco y Más no es un formato que funcione bien con Aldi, por lo que no me sorprende que se vendiera por separado.

Sing:

Es posible qué Fresco y Más tenga mucho más éxito cuando SEG no está en la pintura.  La empresa nueva va a poder expandirse sin que el empañado Winn-Dixie la agobie.

Sidekick:

Sin comentarios. No hablo español, jajaja.

Do you think this is a direct result of the potential Kroger-Albertsons merger?

AFB:

Possibly. If Aldi's main motive is to become one of the top players in American grocery, seeing those two chains combine might have inspired Aldi to take drastic measures to ensure a path to the top.

Sing:

I wouldn't be surprised if it was.  Aldi needs to stay on its game if it wants to "compete in the big leagues" and an acquisition like this is certainly a way to to this (and to stir up some controversy). 

Sidekick:

Potentially, as this gives Aldi more of a holistic slice of the grocery pie with full-service stores in their portfolio. This is rounded out by their partnership with Instacart to provide delivery since 2017 and curbside pickup since 2020 (although it appears curbside is now handled in-house by Aldi).

Retell:

I think that could play a part in it, yes. And not just in the sense that Aldi wants to remain on a competitive level as is suggested above; I can further speculate that perhaps the pending Kroger-Albertsons merger is in fact a part of Aldi’s vision: what will happen to all those divestitures…?

What do you suspect Publix makes of this?

AFB:

I think the bars in Lakeland were filled with Publix executives the evening after this announcement, knowing that they'd have to face a viable competitor again.

In all seriousness though, Publix has never considered Aldi a direct threat, and Winn-Dixie was a joke that wouldn't die. If the two combine forces and Aldi can retool Winn-Dixie to be a low-price leader, now Publix has a competitor again.

Sing:

I honestly think Publix doesn't give a rip.  They probably see it as a waste of Aldi's money to think they can compete with the "the green giant", and the only thing Publix will probably do because of this is to now include Aldi in the list of companies forbidden from leasing space in a current or former Publix shopping center!

That being said, the thought that Aldi could indeed convert all Winn-Dixie and Harveys stores to the discount format really scares me.  I personally love Publix, and while Publix currently doesn't see Winn-Dixie as much of a threat, it still exists to serve as some sort of chek on power.  This potential vacuum of competition could actually hurt Publix as it could allow the company to really stagnate and become significantly more complacent, increase prices, and decrease service. 

Sidekick:

I'm sure they are watching this like a hawk, but likely taking a "wait and see" approach for now.

What do you think will happen with SEG's agreement with C&S Wholesale to operate all Winn-Dixie and Harveys distribution centers?

Sing:

I will be quite interested to see how this plays out because on the one hand, I doubt Aldi currently has the capacity to service 400 additional stores in the Southeast, but on the other, I also doubt they want a third-party middleman running their distribution centers.  That being said, C&S currently has relationships with most, if not all, of Winn-Dixie's current vendors and I feel like transitioning them over to Aldi wouldn't be a seamless process.  At the very least, some people would probably be a bit upset that they now can't buy for or sell to Winn-Dixie.  I'd especially be curious to see what the terms are in the current agreement and whether they mandate that C&S runs the distribution centers for a certain number of years, or if they simply own them outright.

Albertsons Florida Blogger:

Hopefully this isn't our future! - Former Winn-Dixie #2316 - Rockledge, FL, closed 2005

I've read a lot of articles on the Aldi/Winn-Dixie deal these last few days and heard a lot of theories about what's going on here, everything from this being purely a real estate move to Aldi being afraid of what may happen if Albertsons and Kroger merge. I personally feel Aldi buying Winn-Dixie to gut it for the real estate would be a poor move overall, as there's no shortage of places for Aldi to open their typical 15,000-20,000 square foot stores in Florida. Aldi has said there will be some Winn-Dixie and Harvey's stores that convert, and they key word there is some (although I have seen other articles which mention that "a significant amount" of stores will convert, but again, what is the definition of "significant" - 100 stores? 200 stores? Certain geographical areas?). I know this probably isn't the best source for information, but a Winn-Dixie employee that was commenting on Facebook mentioned that Aldi will essentially have a tier system when choosing what stores to convert, with the locations named for conversion being primarily urban stores that aren't performing well as Winn-Dixie. I think a lot of the stores that convert will be the Harvey's branded ones, as Winn-Dixie tried to retool Harvey's as a "discount" chain with results that didn't seem to work very well. Winn-Dixie also spent a lot of money upgrading the store fleet, so it would also be a total waste to see those newly remodeled stores (including a handful of newly built ones) get converted to Aldi.

I feel this deal is something along the line of Amazon buying Whole Foods - an experiment to see if running a traditional grocery chain is a viable option for Aldi's future growth, especially amidst all the mass consolidation that will occur if the Albertsons/Kroger deal goes through. Winn-Dixie is in a very good position right now to take on Publix, having worked on upgrading the store fleet to promising results, and with a respectable presence in Florida. Aldi has stated recently it wants to be the 3rd largest grocery chain in the United States, and even with 2,000 stores, Aldi still has a long way to go to build up the volume Walmart and Kroger (the current #1 and #2) have. Acquisition could be the faster way to the top, and if Aldi has success running Winn-Dixie, it could open doors to other acquisitions in the future (and possibly the purchase of castoff stores from the Kroger-Albertsons merger).

Winn-Dixie #308 - Jensen Beach, FL - 2019 - AFB

Aldi is really popular in Florida - their stores are popping up like weeds here. Florida is only one store away from tying Illinois as the state with the most Aldi stores (211), and by the end of the year Florida will for sure have taken that title from Illinois, even without Winn-Dixie in the picture. If Aldi is going to experiment with owning a traditional format, might as well do it in a growing market where you know you have a strong following. If such a venture doesn't work here, it probably won't work elsewhere. If this works well, Aldi and Winn-Dixie could be a Floridian grocery powerhouse with the power to take on Publix. If this fails, any Winn-Dixie stores that aren't converted to Aldi could be sold off to someone else.

It seemed like Winn-Dixie had culled its store fleet to be the perfect missing slice to Kroger's presence in the Southeast, which is why I thought Kroger was always SEG's intended suitor for when it was time to sell. However, Kroger's recent strategy of slowing down the construction of new physical stores and lack of care for existing ones isn't exactly what I'd like to see in a company running Winn-Dixie at the moment. With Kroger involved in the Albertsons mess, Aldi was able to slip in, so it will be interesting to see how this arrangement unfolds. I would like to see this unfold where Aldi invests in Winn-Dixie to give it that last push to be a viable chain in the long term, rather than a situation where Aldi strips Winn-Dixie of its assets and plants hundreds of new Aldis all across Florida. I really hope Aldi isn't trying to take Publix's advice that smothering an area with an excessive amount of stores in close proximity is the key to success - I like Aldi - I actually do most of my grocery shopping there, but I don't think Florida needs 600 Aldi stores (some within a block of each other) if the worst case scenario comes true.

Winn-Dixie #662 - North Port, FL - AFB

Sing Oil Blogger:

Like I mentioned in my introduction, I was initially shocked by the news that Aldi wanted to purchase Winn-Dixie and Harvey's; however, the more I thought about it, the more I realized that there is an intriguing business angle.  On the surface, the acquisition seems to serve as a bizarre land grab for quirky a German grocer who seemingly lost their way home—until you look at the larger context.

The grocery market in Florida is considered by many to be a duopoly between Publix and everybodyelsewhomshallremainunnamed.  Notably, Publix doesn't even seem consider Aldi a direct threat to its business model.  I've read through countless lease documents for former Publix stores and future Publix shopping centers which all contain similar verbiage to what I mentioned in my post on former Albertsons #4315 / Publix #1323:  

"As a prime consideration and inducement for Tenant to enter into this Agreement, Landlord agrees that, until December 31, 2041, no full-line retail grocery supermarket use (such as, by way of example, but not limitation, Publix, Kroger, Safeway, Winn Dixie, Wal-Mart (with respect to Wal-Mart's grocery store concepts), or Sweetbay) shall be permitted to operate within the Premises.  Notwithstanding the foregoing, the following uses shall be permitted at the Premises, and the use and occupancy for, or the operation of either or both of the following in all or any portion of the Premises shall not be a violation of the use restriction set forth herein: (i) a discount retail grocery supermarket (such as, by way of example, Aldi or Save-A-Lot) . . ."

If Aldi does preserve the Winn-Dixie banner and format, it provides the company an avenue to garner Publix' attention and potentially gain a noticeable market share against the company famous for making others recede back into the Great North.  Like AFB has said before, the only reason Winn-Dixie has stuck around the Sunshine State for this long is because they have nowhere else to go!

As for what I hope may happen once this deal closes, is that Aldi will continue to operate the new-and-improved Winn-Dixie in roughly the same manner as it has been run for the last couple of years, all while returning the chain to the value-friendly nature it was once known for.  Somebody familiar with the grocery industry once told me that Winn-Dixie seemed to have lost its way when it launched the Marketplace format in the 1980's:  the company alienated its shoppers by not focusing on prices and instead spending lots of money on flashy new stores.  In the end, these stores couldn't compete on Publix' level and the company overextended itself into bankruptcy.  Like I mentioned before, I'm not surprised when I find items at Winn-Dixie that are pricier than Publix.  Aldi obviously has a formula for bringing low costs to consumers and I think if they can find a way to balance price with the enhanced level of service at a Winn-Dixie, they can have a winning combination.

Winn-Dixie #168 - Chiefland, FL - 2021 - Sing

Additionally, I'd love to see Winn-Dixie return as "America's Supermarket" with an expansion effort into formerly forgotten territories.  I'm intrigued by the idea that Aldi could want to expand into a larger-format supermarket, and they could use the Winn-Dixie brand to take this concept to additional states.  What if Winn-Dixie was able to make it back to Indiana?! (Yes, The Beef People made it up to The Hoosier State and over to The Lone Star State at one point, and we just might get to hear more about one of those stores in the near future.)

I've got to say that I personally despise shopping at Aldi more than I do at Kroger, but I also recognize that the former is really good at offering what it advertises:  cheap groceries in a no-frills environment.  Call me bougie, but it's hard for me to settle for a grocery store where I can't buy aluminum foil (an item I needed and couldn't buy the last time I attempted to shop at Aldi) and I can't get freshly-sliced deli meat.  I'm also not skilled at the necessary gymnastics in the checkout line, but that's less of a deal breaker than the other two are for me.  At least they don't hide the fact that they lack customer service unlike someone else . . .

Speaking of the big blue, my 2021 realization that Winn-Dixie was not dead was a breath of fresh air to me.  Not only was it exciting to document the radical transformation of stores in real-time, but it was also nice to see that another mid-tier supermarket chain could manage to run relatively clean, well-stocked stores and have adequate customer service (no understaffed stores or rat infestations here).

Courtesy Local Guide (Google Maps) - August 16, 2023

In other news, Winn-Dixie also unveiled its newest décor package last week:  one I like to call "Out to Pasture."  This unveiling also coincided with the grand opening of Winn-Dixie's second built-from-scratch store in years, following the opening of the Grand Cypress store in St. Johns last December.  While the package seems to be inspired by its predecessor, it notably uses many more stock photos, "Chek" accents, and fence-like panels throughout the store.  The fence motif, particularly in the produce department, instantly reminded me of a grassy horse pasture, and I feel like the tongue in cheek name is only fitting for the company who is about to endure some radical, if not life-threatening, changes.  Who knows, the new Apopka Winn-Dixie may be the only store on Earth to ever sport this look, and could serve as the last hurrah for the storied company.  Now we just need a shaggy dog to run through this shot, and all would be fine with the world. 

Furthermore, news broke this week that SEG will offload its pharmacy lists to CVS and Walgreens, which isn't entirely surprising yet still shows that Aldi has some plans in store to scale back Winn-Dixie's operations.  It's also worth noting that the brand new Apopka City Center store mentioned above opened without a pharmacy, as did several other recent locations.

Winn-Dixie #580 - Theodore, AL - 2023 - Sing

The optimistic side of me believes the renewed competition is going to be a driving force for innovation and economic stimulation, so I'm excited to see what a new perspective may bring for the rebounding grocer; however, the pessimist in me still holds a healthy dose of skepticism in the end.  Who knows; the Marketplace may not be the only piece of Winn-Dixie we find in the rear view mirror.

Sing Oil Sidekick:

Contrary to the S.O.B., I am a huge Aldi fan and do most of my weekly shopping there (and despite S.O.B.'s experience, you can indeed buy aluminum foil at Aldi). I agree that most shoppers are unable to buy their full grocery list at Aldi, but Aldi understands that too. I have heard multiple Aldi execs say during interviews that they aim to save consumers a lot of money on the majority, but not all, of their list, which I believe they are more than capable of doing. After all, their lightning fast expansion can't be for nothing! In addition, Aldi has expanded their product offerings immensely over the years and now offer unique and Whole-Foods-worthy products like my favorite "new age beverage" kombucha, oat milk, vegan cheese and meat alternatives, tofu, and even pre-cut fruit. This product expansion combined with my Aldi habit caused my weekly shopping to evolve in a way to where I naturally plan my meals around my knowledge of what products Aldi offers and could actually get 100% of my groceries at Aldi for most weeks in a month. 

My hope for the SEG stores is that Aldi will preserve the brand equity they purchased while bringing some of their no frills approach to ultimately improve margins. I expect to see a larger presence of generic brand products, hopefully including some existing Aldi labels like Barissimo coffee, Simply Nature organic products, and Specially Selected premium foods. Don't be surprised if Aldi eliminates placing products individually on shelves in favor of leaving them in cases. One change I desperately want to see is the elimination of membership-card-based sales, as this is a large reason why I don't enjoy shopping at Winn-Dixie or Kroger. The idea of someone selling data about what foods I'm buying just to save me a few cents does not appeal to me! Aldi's whole philosophy is to bring savings to the masses (fun fact, Aldi doesn't  even accept coupons), so I don't think this hope is too far fetched. 

Finally, I hope that Aldi brings a little bit of its sense of humor to the SEG stores. Aldi has really embraced their online fan culture even so far as putting out price tags that show what products are fan favorites each year, decals revealing that certain products have online fan followings, and even occasionally releasing Aldi-themed merch in the Aisle of Shame. I think this little sprinkle of sarcasm and self-aware humor is entertaining to me as a fan, and a refreshing change from other competitors in the grocery industry. Best of luck to Aldi as they continue to build their footprint in this region with a time-honored brand!

Trailer at the Grand Opening of Winn-Dixie #2557 - Viera, FL - 2021 - AFB

 

Note: This post was NOT written with ChatGPT, but it WAS proofread and edited by the Sing Oil Sidekick 😉