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Robert Trigaux

Sweetbay store closings driven by Publix, Wal-Mart pressure, sagging parent company performance




Belgium-based Delhaize Group owns Sweetbay Supermarket, among other regional chains, in the United States but has watched the company stock price fall dramatically in 2012. Now it's tightening up and closing underperforming stores. It trades as DEG on the New York Stock Exchange.

sweetbaysign.jpgWake up and good morning. To anyone shopping Sweetbay Supermarket stores in recent years, it was getting pretty clear that the grocery chain showed signs of fatigue, as if it had run a good race but was panting and still found itself well behind area frontrunners, Publix and Wal-Mart.

The chain announced Wednesday that it will close 33 Sweetbay stores in Florida and leave open 72. (Here's the complete list of closings.) That's a draconian cut, a cost saving measure that begs some questions. First, is Sweetbay just trimming its underperforming stores and steadying the ship? Or is this the initial phase of a shrinkage of a grocery chain that's simply not big enough to compete with the giants in the Tampa Bay area and the state? If Sweetbay could not keep up with the big boys before, what can it do with one third fewer locations?

Of Sweetbay's 33 closings, 12 are in Pinellas and Pasco counties, six are in Tampa, plus these single store closings in Zephyrhills, Spring Hill, Plant City and Homosassa. So 22 of the 33 are in the Tampa Bay region, with the bulk of the other closings down the coast in the Sarasota and Fort Myers markets.

I like grocery shopping. It's fascinating to see the seasonal change of fresh produce and the range of ethnic food offerings growing on the shelves of many grocery chains. But Sweetbay lagged. Its shelves were not competitively stocked, forcing shoppers to go to other chains to complete their shopping lists. The employees seemed less sure of where items were and, in produce, at times could not identify one product from another. And checkout lanes often were minimally staffed.

This is not a criticism of Sweetbay as much as a simple assessment of how difficult it is to compete against Publix and Wal-Mart, the No. 1 and 2 players in Tampa Bay in the grocery business. Publix is one of the biggest companies based in Florida and has long been touted as one of the best grocery chains in the country. It pushed into the Atlanta market years ago and now is a major player. Now it's pushing into the Charlotte, N.C., market and I have every confidence it will push aside lesser players there, too. Publix, while often more expensive than Sweetbay (especially in meats) also is more effective in offering a sense of vlaue to customers through its aggressive BOGO campaigns.

And Wal-Mart is Wal-Mart. It underprices Publix and Sweetbay on many grocery products. And that, ultimately, will be tough for any competitor to handle.

sweetbayrenovation2004jamesborchuck.jpgSweetbay, of course, is the rebranded name of the old Kash n' Karry chain based in Tampa Bay that in 2004 reintroduced itself as a more upscale and sharper looking chain. The photo at right, taken in 2004, offers a typical look at a store interior that had been revitalized and redesigned to introduce the Sweetbay name. (Photo: James Borchuck, Tampa Bay Times.)

Sweetbay is part of Belgium's Delhaize Group whose Jan. 17 earnings report shows that fourth quarter revenues for Delhaize America fell 2.1 percent in the fourth quarter, with the company anticipating a 17.5 percent decline in 2012 operating profits.

Top down, that explains much of the cost pressure to shrink the Sweetbay franchise. It will be interesting to see if and how Sweetbay adjusts its strategy to remain a healthy player in the Tampa Bay grocery market.

-- Robert Trigaux, Business Columnist, Tampa Bay Times



[Last modified: Thursday, January 17, 2013 7:29am]


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