Reflections on Year One of AL-DIxie
Your source for continuing coverage of the Aldi-Southeastern Grocers merger.
Keep on scrolling for AFB's new post on AL-DIxie #213 in Westlake, FL
Appended on January 14, 2025
Wow, what a year!
Despite none of us being surprised that Southeastern Grocers' private equity investors decided to sell out, all of us at My Florida Retail were shocked to hear that the buyer was Aldi. The news was so sudden that none of us quite knew what to expect. I, for one, stated, "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." Seventeen months later, I still stand by my argument that Aldi could have more to gain than strictly real estate; however, it seems like all the German discounter wanted was a blitzkrieg land grab.
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| Courtesy Aldi - R.I.P. Winn-Dixie #1333 (2001-2024) - Former Delchamps |
Back in August 2023, I went on to say that, "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." Despite my vision of the ultimate outcome being different back then, it seems like this prediction may still hold fast.
I've recently talked to several people newly exposed to Aldi, and the main trend I've spotted is that the chain is much more effective at stealing the cost-conscious customer away from Walmart than it is at stealing service-minded shoppers away from Publix, Winn-Dixie, or even Food Lion. Many people in the South have a problem with limited selections, no service departments, buggy rentals, and – gasp – self-service grocery bagging, that price alone cannot resolve.
While I'm not saying that Aldi doesn't have a place in towns across the Southeast, I am saying that it doesn't have a place in every town across the Southeast. You don't know how many comments I've read stating that people are adamant they will boycott Aldi if the grocer decides to convert their local Winn-Dixie supermarket; that argument may be dramatic in the moment, but it signals a broader message that Aldi better tread lightly if it doesn't want to alienate a large population.
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| Courtesy Aldi - R.I.P. Winn-Dixie #1449 (1994-2024) |
On a similar note, if Aldi doesn't tread lightly, Florida shoppers are going to pay. I was personally shocked when I saw a half gallon of milk selling for $3.69 in a South Georgia Publix versus $2.77 in an Atlanta Publix and $2.72 in a Nashville Publix. That's no coincidence, as I consistently find products in Atlanta and Nashville stores which are significantly cheaper than those found in South Georgia or North Florida supermarkets. All of these markets have an established presence from Aldi & Walmart, so that does not seem to be a factor.
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Courtesy Aldi - R.I.P. Harveys #1689 (1987-2024) - Former Winn-Dixie #89
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It doesn't take a rocket science degree to realize that Kroger is
putting significant price pressure on Publix, all while Winn-Dixie and
Food Lion seem to be less of a threat. Imagine what would happen if even
more direct, full-service competition disappeared . . . I love Publix, but I realize
that they still need to be kept in "chek". I guess higher prices at
Publix could be just what Aldi is going for.
Add to that the fact that most Publix territories, except for Florida,
allow for 1/2 BOGOs (where sale items are priced as 50% off rather than
requiring the purchase of two items to get the special price), which
exacerbates the pricing problem down south.
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Courtesy Aldi - R.I.P. Winn-Dixie #1590 (1998 - 2024)
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The outlier in my unscientific milk survey is the Montgomery area. Publix' competition here closely resembles that of Florida in that the major players are Winn-Dixie, Walmart, Target, Aldi, along with some various & sundry independents. The difference, though, is that the milk price matches Atlanta which has the added threats of Kroger, Sprouts, Whole Foods, Trader Joe's, Ingles, Food Depot, and so on. Are Winn-Dixie, Walmart, & Aldi stronger players in Alabama than in Florida, or are other factors at play here? I earnestly don't know.
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Courtesy Aldi - R.I.P. Winn-Dixie #67 (2014-2024) - Former Food Lion
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What I do know is that things look much different than they did this time last year. Back when the deal closed, the press release stated 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 [2023], 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 - R.I.P. Winn-Dixie #184 (1994-2024)
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It turns out that "approximately 50 stores" evolved into approximately 90 stores selected to convert before the end of 2024. Furthermore, these 90 locations don't all appear to be struggling stores like #579 in Auburn was. Everything from the transformational flagships of the last decade to brand new stores from three years ago have been pushed aside to make way for Aldi.
This year past year has certainly been full of surprises, and I expect 2025 to be much the same. I'll close out this portion of the post with a comment I read the other day (I attempted to format the way the author intended). I have no clue whether or not it has any merit, but it made me think nonetheless.
Anonymous - January 9, 2025 at 9:50 AM
From what I’ve been told Aldi has no intentions of running SEG long term. They want to convert as many stores as possible, but they don’t want to saddle the new Aldi’s with paying for the whole space, making the new Aldi’s less profitable. They would rather SEG take the hit in profitability.
Store conversions if/when going forward depends on:
1. Is the building owned or leased?
- If owned, is it stand alone or Plaza?
- If stand alone, is the location a prime location?
- No, likely sell.
- Yes or plaza, Convert
2. Rented
- Is it a stand alone or plaza?
- Stand alone:
- Sell or let lease expire, unless it is a prime location.
- Plaza:
- Can the lease be broken and a [sic] new leases made for the reduced footprint? Sticking the landlord with finding a tenant for the unused half.
- If not, does the leases [sic] allow for subleasing?
- Yes: find a tenant for unused space.
- No: Sell or Wait for lease to expire and try to negotiate a lease for wanted space
Only time will tell what happens to what's left of Winn-Dixie during its centennial year, but as always, we'll be here to report on it. It may be saddening that some of our best-case scenarios obviously won't pan out; we can only hope that there is still a small chance of the storied brand living on in one form or another. I suppose we'll just have to stay tuned.
- The Sing Oil Blogger
Keep on reading to reflect on all of this year's notable events regarding AL-DIxie
A few headlines from this year include:
Southeastern Grocers sells off Winn-Dixie's former Edgewood Avenue headquarters, squashing rumors that the grocer would downsize there from its current Prominence Parkway space.
Other than the rumors I heard suggesting that Southeastern Grocers may leave its current HQ, it does not surprise me that Aldi is trying to "trim the (beef) fat" by selling off underutilized real estate assets. This is similar to how several surplus equipment auctions have popped up, including one taking place in a former store which closed back in 2019.
Several Winn-Dixie liquor stores will continue to operate despite the adjacent supermarket closing to convert to Aldi.
This headline is the perfect example of how none of us knew what to expect after this sale closed. For reasons unknown, Aldi appears poised to preserve the Winn-Dixie Wine & Spirits branding on several liquor stores during and after the Aldi conversion process. I witnessed this firsthand when I stopped by Winn-Dixie Liquors #505 in Panama City Beach several months ago. Despite the adjacent supermarket being closed, all of the liquor store employees continued to don Winn-Dixie uniforms, and registers still printed Winn-Dixie coupons for food stuffs.
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Winn-Dixie Liquors #505 / R.I.P. Winn-Dixie #488 (1994-2024) - October 2024
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Jacksonville-area conversion candidates lack any mention of Aldi on store closure marketing materials.
Despite Aldi not being shy about most "chosen" Winn-Dixie stores' fate in their final days, locations in the Jacksonville area have seemingly lacked any Aldi branding on store closing signage and pamphlets. One could argue that this is due to there being a plethora of other "Winning" options in the area; however, the same argument could be said about Tampa / St. Petersburg. Is there still a small sense of hometown pride at play?
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Courtesy Kyle H. - R.I.P. Winn-Dixie #70 (2014-2024)
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Fresco y Más stores continue to sell Southeastern Grocers store brand items and use SEG corporate resources despite being "spun off".
Several close correspondents have reported that FyM continues to stock Southeastern Grocers items in its stores, while the Hispanic-oriented grocer continues to use SEG branding assets, marketing materials, and website & customer service resources.
The Know & Love private label continues to expand, even launching its own selection of wines.
Why is Southeastern Grocers continuing to expand the Know & Love brand despite seemingly living on borrowed time? It would be one thing if Know & Love was poised to replace the SEG brand outright in stores; however, there continue to be SEG-branded products which receive packaging updates.
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Winn-Dixie #84 (1987 - Present) - October 2024
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Winn-Dixie still does not know how spell "poblano".
It began as a joke one day when the Sing Oil Sidekick pointed out how one Winn-Dixie tagged poblano peppers as "pablano peppers". It wasn't long before we realized that the problem was endemic across the chain. As we enter into 2025, the Floridian supermarket still has not fixed this clerical error, and it is likely that it will end up dying with the brand. Take a look for yourself next time you walk the aisles of the produce department!
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Winn-Dixie #428 (1980 - Present) - May 2024
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Reflecting on some questions I asked back in March 2024, let's see what answers we have now:
Will smaller towns like Monticello, FL, which don't have any sizable competition, see a conversion?
So far, this has been a tossup. With the exceptions of #2229 in Marion Oaks, FL, or possibly #2367 in Micco, FL, most converted locations at least have a Walmart or other full-service grocery store within a few miles. Towns like Madison and Monticello, FL, where Winn-Dixie is the only chain grocer in town, have been spared thus far.
Will Harveys stores in towns like Americus that also have a Food Lion be spared?
Nope! Notably, Americus is one of only two Harveys stores to convert thus far (Although I've heard rumors that Cordele, GA, may be the third). While I'm not entirely surprised to see it go, I'm still surprised that no other Harveys locations have been touched (not even the pitifully converted former Winn-Dixie stores in Florida). Eastman and Swainsboro, GA, may be too small for Aldi's taste; however, Douglas, GA, still has two Harveys stores and even gained a Publix last year. I really have to wonder why former Sweetbay stores seem more desirable than former Harveys stores. Maybe the small-town Harveys are just too profitable to give up!
Is the presence of a Marketplace interior the death wish for a Winn-Dixie?
In some cases, yes. Over the last year, we have lost:
#0509 | Chelsea, AL
#0579 | Auburn, AL
#0609 | Avon Park, FL
#0169 | Bainbridge, GA
#1513 | D'Iberville, MS
#0184 | Quincy, FL
Meanwhile, the following remain (for now):
#2342 | DeLand, FL
#0478 | Eufaula, AL
#0496 | Jasper, AL
#0580 | Theodore, AL
#0210 | Tamarac, FL
While losing over half of the remaining Marketplace stores may seem like a lot, I'm really surprised that more didn't make the cut. The fact that these stores haven't been remodeled in 20+ years means they were either high performers and didn't need in investment to boost sales, or they were right on the cusp of profitability, yet weren't bad enough to sell.
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Courtesy Aldi - R.I.P. Winn-Dixie #169 (1989-2024)
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I've heard specifically that Bainbridge was in that latter category and that Publix has been waiting on Winn-Dixie to close for nearly a decade to enter the market. Both of those things came true in 2024, I'm just not sure if one ultimately decided the other. As we'll see eventually, Bainbridge was also an old store in a less-than-ideal part of town, so I'd imagine that sales were down for years.
For the last part of this post, I wanted to ask my peers what they have learned since this process began. Here is how they replied:
Kyle H.
I've learned that Aldi doesn't have any preference for where they put stores. Plazas, standalone buildings, places where there's no other shopping options, if it's new construction, or if it's 50-60 years old. Another thing I've found out is that sadly, a lot of the things from the initial thoughts post didn't end up happening. There would be no larger Aldi stores because of this, and there seems to be no desire to preserve the Winn Dixie brand, and especially Harvey's.
The Sing Oil Blogger
I've learned that Aldi simply does not care about Winn-Dixie, and seems to be content to passively let the company wither away. It has become clear that Aldi simply wanted these stores for their real estate and saw this deal as the easiest path to expansion in the Southeast, regardless of the consequences.
The Sing Oil Sidekick
I've learned that SEG private label products continue to be refreshed or rolled out (looking at you, Know and Love) post acquisition. I do wonder why Aldi would continue to expend resources on dying brands and products. I hope they'll preserve Chek Soda; they have quite a variety of flavors, and their Chek Cola is the closest private label Coke knockoff I've ever tasted. They even have a knockoff "Mexican Coke" A.K.A. Chek Cola Made With Real Sugar. Other favorites of mine include their blue raspberry, mango, and Diet Freshy (a Fresca dupe) sodas which make great cocktail mixers. Only time will tell if I can continue getting my sugar fix and cocktail ingredients from the Chek Soda aisle.
AFB
At the start of this I thought Aldi had a chance to broaden its appeal in the Southeast by prototyping new concepts like a Winn-Dixie with an Aldi "store within a store" department that could have proved fruitful in a mutual way, and possibly even helped Winn-Dixie's pricing image. Sadly, it turned out Aldi was nothing more than a predator seeking real estate in a market they really wanted to expand in. What bothers me the most about all this is Winn-Dixie was really was turning itself around in the 2020-2022 timeframe, possibly the start of small but meaningful progress to creating a stronger chain that could really take on Publix. With Aldi now in the picture, I feel like everything Winn-Dixie did to rebuild itself from the 2018 bankruptcy to now was a total waste considering Aldi's apparent endgame and disregard for all of that. Why let Winn-Dixie try to turn itself around if the private equity ownership just wanted out and would sell to anyone? Why dump millions of dollars into new stores and remodels just to sell out to a new owner that could care less about any of that? I'm sad and quite disgusted at what I'm seeing unfold, and living in an area that's losing a number of Winn-Dixies as part of this deal, it means less grocery options for me all around.
Retell Retell
For me I think the liquor stores being kept and the potential of maybe adding Aldi branded ones elsewhere was quite interesting.
Charles Burgess
When the news of the Aldi buyout was first announced, I had a feeling
this would be solely a real estate transaction. Many of my former WD
co-workers told me I was wrong but, unfortunately, Aldi proved me right.
I have been shocked at the lack of communication between Aldi and SEG
employees. I'm also disappointed to see the way the employees are
treated in the stores that are converted. Neither Aldi nor SEG seem to
care about the future of their staff. It is crazy to see Aldi is doing
the same thing to SEG as SEG did to Sweetbay, Harveys, Reids, and Bi-Lo.
My prediction is this Aldi/SEG marriage will not end "happily ever
after" for either party. WD and Harveys will be left for dead and Aldi
will be saddled with undesirable locations. Aldi has enough cash that
they probably won't even care. Every supermarket analyst predicted WD
would be the ruination of their own business. No one could have
predicted Aldi would be the one to drive the last few nails in the
coffin.
P.S. Since several of you have mentioned the annoyances of Blogger's handling of 300+ comments on the Rolling List post, feel free to leave any future relevant comments here instead. Don't worry, the comment field on that post will remain open as well.
