Greetings! In a surprise message from contributor HR2012TPA, I learned that we no longer have to wonder whether or not the AL-DIxie merger would come to fruition: it has.
Just this morning, news broke that ALDI has completed its acquisition of the 369 Winn-Dixie stores and 25 Harveys Supermarkets. The Jacksonville Daily Record goes on to report that ALDI will keep Southeastern Grocers' existing headquarters in Jacksonville and the current SEG leadership will remain in place "for the foreseeable future."
This news comes on the heels of SEG completing the spinoff of the 28 Fresco y Más stores back in January, and the older news of all Winn-Dixie and Harveys pharmacies would close by the end of 2023.
In today's press release, ALDI announced that the Southeastern Grocers acquisition is part of the company's plan to expand its footprint with 800 new stores across the country over the next five years.
It goes on to state that "a significant number of Winn-Dixie and Harveys Supermarkets will convert to the ALDI format over the next several years. Starting mid-summer, ALDI will begin a phased approach to the store conversion process. ALDI anticipates that approximately 50 stores will begin the conversion process during the latter half of 2024, with the majority of these stores reopening as ALDI in 2025. As announced last August, ALDI intends for a meaningful amount of Winn-Dixie and Harveys Supermarkets to continue to operate under their current banners."
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| Courtesy ALDI - March 7, 2024 Press Release |
What qualifies as "significant" or "meaningful" remains to be seen, but at least we now have some firm numbers and dates as to how the conversions will begin. I am especially curious to see how ALDI decides which stores to convert. Many locations, like Chiefland or Perry, FL, rely on Winn-Dixie as their only full-service grocer (besides Walmart), while other stores, like Prattville or Wetumpka, AL, are only a short drive away from an existing ALDI store.
Will smaller towns like Monticello, FL, which don't have any sizable competition, see a conversion? Will Harveys stores in towns like Americus that also have a Food Lion be spared? Is the presence of a Marketplace interior the death wish for a Winn-Dixie? It seems we will have to wait several more months to find the answers to these and many more questions.
AFB and I were also discussing that these plans may seem vague because ALDI doesn't have a solid plan for what to do with these stores. It's quite possible that the German grocer is testing the waters by initially converting 1/8th of the SEG fleet so see how the new locations do versus how sustainable the current Winn-Dixie model is. ALDI may decide it wants to sell off remaining locations, continue conversions, or keep stores as they are depending on how the trial goes. The fact that the press release doesn't mention anything about expanding the Winn-Dixie or Harveys banners does give me pause . . .
What will happen to the current under-construction Winn-Dixie in Fruitland Park, FL, remains to be seen as well. That store went out for bid in August 2022 but has yet to open.
I'll also be curious to see whether or not this deal will have an impact on the pending (yet seemingly in danger) Kroger-Albertsons merger.
As always, you can count on your Southeastern Retail Bloggers to keep you informed of all the updates we find. Make sure to reread our initial analysis from back in August to learn more of our thoughts and check out my first post in this year's I Marketplace Madness series covering a former Winn-Dixie in Pinson, AL.
Until Saturday,
- The Sing Oil Blogger
Oddly enough, the Aldi growth announcement, along with the 'significant' statement about SEG stores, made headline news here in Houston today. As those of us in the Houston retail enthusiast community thought, it was strange that the story made headline news in the local media when it is clear Aldi's ambitious growth plan does not really include much further growth in Texas! If anything, they might well shrink around here.
ReplyDeleteBut, anyway, I think it is still hard to get any clear sense for what Aldi has planned for those SEG stores. I suspect Aldi will have to analyze what moves they can even make at each individual property. Can the store be divided and subletted? How much interest would there be in a sublet from other retailers/organizations? If subletting isn't realistic, can the store stand by itself as a full-line store?
And, of course, we don't even know what a full-line store will be like in the Al-Dixie era. It might look like The Beef People as you know it now or Das Rindfleischvolk might look quite different. We'll see, there should be a bit more clarity on that in the near future and then we'll have to see further developments as they happen.
I think the Al-Dixie merger is quite different than the Krogertsons merger at least in the sense that in Florida at least, grocery prices are quite high. SEG really couldn't do much to lower them on their own and attempts by other grocers to compete in Florida have been futile. Aldi, OTOH, has been well-received in Florida and it does appear that they do offer a legitimately cheaper option. The labor situation is less complex in this merger. I think Aldi is quite well-known for paying pretty well for grocery work, but we also know they don't keep the stores well-staffed. That's not even factoring in that Aldi stores are smaller than the typical SEG store.
There are some parts of the merger which are still unknown to me at least. What does C&S make of all of this or are they too busy with the Krogertsons merger to worry about what's going on with SEG? Also, what impact may this have on food providers given that Aldi isn't exactly known for having a wide variety of brand name products?
So, yeah, there are a lot of unknowns, but that should make things interesting for the Southeastern Retail Bloggers!
Wow, that's really surprising. None of the Georgia or North Florida (with the exception of Jacksonville) news outlets I follow made a peep about the announcement. I wonder why it had such an impact on Houston news? Maybe the push into Las Vegas made the Houston news media interested? Or maybe the core news stations are owned by a conglomerate who also has stations in an area that will be impacted?
DeleteThe more I think about it, the more sense your argument seems to make. Aldi would have a hard chance subletting a space in somewhere like the aforementioned Jefferson Square store but would have a much easier time with a suburban Miami location. Still, it would be a shame to see places like the Baymeadows WD converted to an Aldi!
Trust me, I'm going to visit as many Winn-Dixie stores as I can in the near future to learn what I can about Das Rindfleischvolk. I especially wonder how long it will be before I see Friendly Farms cheese taking the place of SEG Prestige!
SEG totally could have implemented lower prices in Florida had its predecessor not lost its way in the 1990's and gone all in on the Marketplace. It still amazes me how Winn-Dixie managed to go from its peak at nearly 1,400 stores to the depths of less than a third of that. I guess that's what two bankruptcies will do to you! While the labor situation is less complex, the converted stores will most definitely employ fewer people than a standard Winn-Dixie. I wonder how well that news will blow over.
It will be interesting to see what happens to C&S with all of this. I feel like they have to be aware of what is happening and are actively in conversations with Aldi. I'm also sure the existing Winn-Dixie suppliers really hope that the account doesn't just vanish into thin air – that's a lot of people's livelihoods at stake!
I for one am not happy. I hate Aldi. You can’t do a full week shopping there. I wish Kroger would have purchased Winn Dixie. SEG screwed over their employees. We all know how many employees Aldi has in one store compared to a Aldi. I said it when this was first announced they would do this and I knew they would. This is the end for Winn Dixie.
ReplyDeleteI'm not a fan of Aldi either for the same reason. I know some people who will argue that it is easy to only shop at Aldi and that it just takes planning. I, for one, don't like to plan that much when grocery shopping, and like to find basics like aluminum foil when I visit a store.
DeleteAs for your second point, despite the bizarre outcome we got, I still am glad that Kroger didn't buy SEG. The Kroger stores I've visited recently have been far from a pleasurable experience and make Winn-Dixie seem like a luxury supermarket. I really hope that SEG is able to maintain some autonomy and continue to operate roughly status quo (minus 50 stores), but I agree that things are not looking great. Even 50 stores converting to Aldis means fewer employees, and I'm sure if the pilot is successful, there will be 50 more after that.
The only part that gives me hope is the fact that Aldi has said it will keep the current SEG headquarters and leadership in place. My guess is that means they have floated the possibility of A). totally keeping some WD stores as they are for the long haul, B). kicking the can down the road to see how this experiment works out, or C). keeping the corporate structure in place so Aldi can sell off the rest of the company once it has the stores it wants. Only time will tell which option we receive.