Sweetbay Off to Good Start
By George Anderson
In a conference call with analysts, the Delhaize Group said it was encouraged by the early performance of its Sweetbay stores in Florida.
Pierre-Olivier Beckers, president and chief executive officer of Delhaize America said, “We have seen significant increases in sales distribution in such fresh departments as
meat, seafood, produce and deli.”
The latest Sweetbay opening took place earlier this week at the intersection of Collier Boulevard and Vanderbilt Road in Naples, Fla.
Store manager Walter Reedy, was understandably excited about opening the new Sweetbay.
“There were around 150 people waiting outside,” he told the Naples Sun Times. “I’ve opened four or five stores in the northeast, including my own in New England, but this
one has a special meaning. We have people from seven different cultures, Mexican, Haitians, Caucasians, African Americans, Japanese, Indian…We honor diversity. I’m proud of
the associates I have in the management team.”
Mr. Reedy said it would be the staff’s performance that determined the success of Sweetbay. “We want to create an atmosphere here that makes the associates feel like coming to
work everyday,” he said.
Moderator’s Comment: Has Delhaize found a winner with the Sweetbay format? How, if in any way, is Sweetbay run differently than other Delhaize chains
in the states? –
George Anderson – Moderator
From my experience with Food Lion and Hannaford Bros, Sweetbay isn’t run that differently from the other chains… and that’s a strength. These chains clearly understand the difference between store remodels and retail format innovations (for instance Food Lion’s Bloom). They also do rigorous customer studies to know the compelling value that’s relevant in their markets and then orchestrate clear points of differentiation in their brand. These chains also recognize the importance of culture and go to enormous effort to specify the behaviors they expect of associates.
Sweet Bay is devoted to great tasting food that appeals to a broad range of ethnic populations in their markets, and offer a relevant alternative to other supermarket and supercenter competitors for their target customers.
I recently visited a Sweetbay in Florida. While it was nicer than the conventional Food Lion’s I have visited, it did not seem to compare in service, variety or quality to the Publix stores I seen. And, I think we know who the price leader will be.
So, in that market, what is their strategic advantage going to be?
That said, I certainly respect Delhaize and its “change for the better” initiative.
I haven’t seen them so I’m not one to pass judgment. All executives say new projects are going better than expected. You never will hear an executive say they are disappointed with the results of a new store. You need to learn to read between the lines.
“We have seen significant increases in sales distribution in such fresh departments as meat, seafood, produce and deli.” What they means is sale did not increase. What happened was that the perimeter departments just started doing a higher percentage than the grocery department.
Sweetbay should get a boost as the Winn-Dixie stores start to disappear. However, with Winn-Dixie having over 55% of its Florida stores performing below $5 per square foot, there may not be much to take.
While it sounds like they might have a great concept, it will also take superior and consistent execution by the store’s staff to make this a long-term success. Publix is a formidable competitor and to be successful against them will not be easy. Wal-Mart is also gobbling up market share at a rapid pace, so maybe Winn-Dixie will be the one to give Sweetbay the customers they need to be successful. You don’t have to be the best to survive, but you can’t be the worst either. I would guess there is still room for at least one more good supermarket in Florida and just about everywhere else.
Thanks for the follow up story on this one. It looks positive and there is opportunity. I am just not sure that you can teach old dogs new tricks. That is the difficult part of such a transition. However, under the right leadership, it can be done.
Living in central Florida, I have visited a couple of the Sweetbay stores and was impressed. Compared to the best stores in Florida, Sweetbay is a leader. But if your orientation is markets with Wegmans, Marsh, and Bashas….Sweetbay is merely competitive. To their credit, Sweetbay incorporates the tenets of a good basic supermarket with very attractive parameter perishable departments. I was particularly taken with the service meat presentation…the best I have seen in Florida.
But clearly, without Sweetbay, the battle for the “up” market in Florida is not a fair fight. Albertsons and Winn-Dixie certainly are not poised to compete for this business. Publix owns the service and product position in Florida. Consequently, in those selected locations where the demographics support product and service over “price” as consumer priorities, Publix will likely lose some significant business to Sweetbay .
I think the Delhaize Group is smart in picking its early battles with Publix in these predominantly “up” markets. The real test will occur when many of the older Kash N Karry stores, located in middle to down markets, get converted. Micro-marketing and adjusting product mix can only go so far in terms of adapting to demographics that do not resemble the optimal mix for Sweetbay.
In my view, Sweetbay is a “niche banner” and, as long as they match the stores to predominantly upscale markets and can provide consistent service and product offerings across their stores, there will be smiling executes at the Delhaize Group!
Keep (3) things in mind when dealing with anything related to Food Lion/Delhaize.
– Very poor execution at store level has hurt the company in much of its core US markets. Only time will tell if they will spend the money needed to maintain Sweetbay and provide service.
– When the going gets tough, Food Lion’s prices go up and much of the time this pushes more sales to Wal-Mart. Publix is the premium grocery provider in Florida and manages KVI’s as well as anyone. So, if sales are not robust at Sweetbay, what route will they take? Simply waiting on Winn-Dixie to go under is not a strategy I would be willing to invest in.
– In 2006, the Wal-Mart Neighborhood Markets are coming to Florida.