Winn-Dixie V. Dollar General in Different Type of Grocery Fight

Discussion
May 26, 2011
George Anderson

It’s
common practice for retailers to structure real estate deals to keep competitors
from opening a store in the same shopping center. Some have been known to even
let spaces stay empty after they’ve closed a location
rather than let a competitor gain a foothold. So, a lawsuit brought by Winn-Dixie
against Dollar General over the sale of groceries probably shouldn’t
be a surprise.

The Jacksonville, FL-based supermarket chain has filed a suit
in U.S. District Court looking to prevent Dollar General from selling groceries
in 100 shopping centers the two companies share in the Sunshine State.

The suit
claims, according to a Palm Beach Post report, that Dollar General is
in violation of a 2007 judicial decision barring it from selling groceries
in centers where Winn-Dixie, as the anchor "has the exclusive right
to sell groceries."

An unidentified Winn-Dixie spokesperson told Supermarket
News
, "Winn-Dixie’s
decision to operate a grocery store at a particular location is typically contingent
on obtaining the exclusive right to sell groceries within the store’s
shopping center."

Dollar General has denied the charges and plans to fight
the suit.

Discussion Question: What is your reaction to the suit filed by Winn-Dixie against Dollar General over the sale of groceries in shopping centers where the two have stores? How could a ruling in this case affect the shopping center industry?

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14 Comments on "Winn-Dixie V. Dollar General in Different Type of Grocery Fight"


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David Livingston
Guest
9 years 11 months ago

This sounds petty and desperate. Winn-Dixie should concentrate on improving their sales via providing a compelling shopping experience. If every Dollar General in the same shopping center as Winn-Dixie were to close tomorrow, I doubt Winn-Dixie would see a nickel in increased sales. Publix is probably having a good laugh and shaking their heads.

Paula Rosenblum
Guest
9 years 11 months ago

I think this is a very straight-forward issue. These real estate contracts are not complicated. They always have a restriction of some sort.

Winn-Dixie reps say they ask for exclusive rights. On the flip side, landlords also put radius restrictions on how close another store from the same chain can be (I’m sure it’s closer in grocery than it is in mall-based GMA – where the restrictions can be up to 6 miles).

Retailers will be watching this one carefully, because it would set a terrible precedent if it goes unchallenged.

Gene Detroyer
Guest
9 years 11 months ago

If Winn-Dixie has by contract “the exclusive right,” then they have the exclusive right. This case should take about 10 minutes to decide in favor of Winn-Dixie. Further, if I am Winn-Dixie I sue the landlord because I paid for a right that the landlord did not enforce.

Ben Ball
Guest
9 years 11 months ago

I’m with Gene. This sounds like an issue for Winn-Dixie and the real estate company–not Dollar General.

Ed Rosenbaum
Guest
9 years 11 months ago

I often wondered how they could both have space in the same centers while essentially selling many of the same products. I pass one center daily in the area I live in Florida where not only do they both have space; they are also located next to each other. It appears Winn-Dixie has the better legal position; but the courts will decide. My guess is this will take years to be settled.

Eliott Olson
Guest
Eliott Olson
9 years 11 months ago

Not only are the terms of the lease being violated but the landlord is also being shortsighted by not enforcing the terms on Dollar General.

James Tenser
Guest
9 years 11 months ago

I’m all for unbridled competition, but a contract is a contract. The assortment in the Dollar General store down the strip may have been acceptable to anchor tenant Winn-Dixie originally. DG’s merchandising strategy has shifted – probably for sound business reasons – but also encroaching on WD’s turf. Price comparisons probably make the issue even more heated.

It’s a bind for DG, since it is committed to its leases and its local shopper following. As its positioning evolves to compete more in grocery categories, it must expect to encounter this type of opposition, and not just from WD.

Steve Montgomery
Guest
9 years 11 months ago

While the comments on the potential sales impact on Winn-Dixie may be correct, if I were them, I would want to ensure the rights I bought and paid for were enforced. Failure to do so would only invite other grocery sellers to seek space in the shopping centers.

Ed Dennis
Guest
Ed Dennis
9 years 11 months ago

Winn-Dixie has a lot of trouble with competition. Being compared to almost anyone makes them look bad. I can understand Winn-Dixie’s concern. If a lease offers a retailer exclusivity then the retailer is entitled to exclusivity. The shopping center industry is usually the party offering exclusivity or the party who agreed to exclusivity to get the tenant. The industry will have to examine the benefits and liabilities of clients. Winn-Dixie commands a much larger footprint, but Dollar General might offer a tenant with greater stability. Now the question is whether Dollar General will counter sue over clothing and hardware….

Ed Dennis
Guest
Ed Dennis
9 years 11 months ago

I would ask as an aside if Winn-Dixie is current on its lease payments. If not, or if they have been late, then they may have forfeited their exclusivity rights because they have not met the terms of their lease!

Craig Sundstrom
Guest
9 years 11 months ago

Like most here, my first thought is “a contract is a contract,” so either WD is in the right (and the case is simple) or they aren’t (and the case has no merit); but things are seldom so simple: one of the liked articles uses the phrase “too many food items,” suggesting the covenants are ambiguous; and DG may respond they are unenforceable, as they are against the public interest. Being neither a lawyer nor a litigant, I won’t venture further.

George Anderson
Guest
George Anderson
9 years 11 months ago

I couldn’t help but wonder if Winn-Dixie planned to go after any bakeries, delis, pizza parlors, etc. that might be in the same shopping centers. They too sell competitive products including beverages, chips, lunch meats, etc.

Jerome Schindler
Guest
9 years 11 months ago

What are “groceries”? Probably not the most precise term. Are the food and household items you see in a Hallmark store, Staples, Stein Mart, Macy’s, Walgreens, CVS, gas stations, etc., “groceries”? The court may use that to duck the issue–perhaps saying that the restriction is reasonably interpreted to only apply to what one would commonly consider to be a “grocery store.” Maybe the Hallmark store has a similar restriction applicable to greeting cards. Winn-Dixie better remove those.

Justin Time
Guest
9 years 11 months ago

When a supermarket chain like Winn-Dixie signs an exclusive agreement that it will be the only store in the shopping center selling groceries and when a variety store like Dollar General starts selling groceries, both perishables and non-perishables, it seems to me that the terms of the lease have been compromised. They have a court decision that argues their case. DG is in violation and should cease its practice where it and W-D are co-located in the same shopping center.

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