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Sweetbay Supermarket to close 33 stores in Florida

The local grocery store wars chalked up another casualty as Sweetbay Supermarket announced it will shutter 33 stores, including 22 in the Tampa Bay area.

The decision disappointed loyal customers but came as little surprise to industry analysts who have watched Publix and Walmart solidify their stranglehold in this market.

Sweetbay's Belgian parent company, Delhaize Group, said the move to close a third of its Florida stores was needed to improve its U.S. results and strengthen its bottom line after a difficult year. About 2,000 employees will lose their jobs, including about 1,200 locally.

"These 33 stores were under-performing stores,'' said Nicole LeBeau, spokeswoman of Tampa-based Sweetbay. "We are a publicly held company, and we have to be responsible to our shareholders.''

The closings, effective mid-February, include six in Tampa and three in St. Petersburg. Competition from heavyweights Walmart and Publix and relative newcomers including Aldi and Target proved too much to support so many Sweetbays, officials said.

"The grocery industry in this market is extremely competitive,'' LeBeau said. "As low as our prices were and as good as our stores looked, it's been a challenge. We hope we can continue to get people in our 72 stores and keep them successful.''

For many industry analysts, the announcement late Wednesday was significant but not shocking. Sweetbay, like Winn Dixie, Albertsons and other traditional regional grocers, has struggled in recent years to stand out amid the growing competition. Walmart, Aldi, Save A Lot and other discounters got the attention of bargain shoppers during the recession. Upscale grocers such as Whole Foods and Fresh Market lured customers focused on health and the environment.

"It's well known in the industry that (grocers) in the middle struggle more than those at the high end or the low end,'' said Lorrie Griffith, editor of the Shelby Report, a monthly grocery trade publication.

Publix holds the lead in market share for Central Florida, followed by a fast-gaining Walmart, Winn Dixie at a distant third and Sweetbay fourth. Combined, Publix and Walmart grab nearly 70 percent of grocery dollars.

Sweetbay's cuts reflect the "Walmartization of the grocery wars,'' said Bob Messenger, a grocery store analyst who publishes the Morning Cup, a daily online newsletter for food industry leaders.

"We're beginning to see Walmart taking a big chunk of the grocery business from players like Sweetbay,'' he said. "I don't see that changing in the near or long-term future.''

He also doesn't see Sweetbay rebounding after the consolidation. "I think Sweetbay is going to be in trouble no matter what.''

The closures come amid tumultuous times for Delhaize, which operates more than 1,500 supermarkets in 16 eastern states under the brands Sweetbay, Bottom Dollar Food, Food Lion, Harveys, Hannaford Supermarkets and Reid's.

In the past month, Delhaize's U.S. division based in North Carolina has cut several top-level positions as part of a major restructuring to reduce costs and reinvest the savings in stores. It also named Brad Wise president of Sweetbay and Hannaford brands, replacing Mike Vail, who helped lead the 2004 transformation of Kash n' Karry stores to the more upscale Sweetbay. Vail now serves as chief supply chain officer for Delhaize America.

Last January, the company announced that it was closing 113 under-performing Food Lion stores, including 20 in the Jacksonville area. Delhaize's latest earnings report released Thursday showed sales for its U.S. stores dropped 2.2 percent last year to $18.8 billion.

Sweetbay's shedding of stores will likely create opportunities for new stores to come into the market, such as Kroger, said Steven Kirn, executive director of the Miller Center for Retailing Education and Research at the University of Florida. It probably will have minimal impact on Publix, which will continue to focus on customer service.

"I don't think (Publix) was losing any sleep over Sweetbay,'' he said. "I think they will try to grab market share and really dominate. They won't try to compete with Walmart, though, because they can't based on their business model.''

Commercial real estate expert Patrick Berman estimates the Sweetbay stores will quickly convert to other uses. Sweetbay rents its locations and many of the soon-to-close stores were either up for a lease renewal or nearing it.

"The good news is that they have good real estate,'' said Berman, a senior director at Cushman & Wakefield of Florida in Tampa. "They have good access, good visibility, good signage and they are a size that can accommodate a lot of other uses.''

Although the addition of empty big boxes could decrease rental rates, he expects it won't last for long. Both retailers and non-retailers are looking for mid-size space in prominent locations, he said, citing Walmart neighborhood stores, Marshalls, Ross, Hobby Lobby, Big Lots and LA Fitness as a few examples.

"There will be a bit of a feeding frenzy,'' he said. "Look at how fast the Borders stores got snatched up.''

Publix spokeswoman Shannon Patten said the company continually looks for new sites and is exploring its options relating to the Sweetbay stores. But no decisions have been made. Publix, with more than 760 locations in Florida, encouraged Sweetbay employees to apply for jobs at their stores.

For many Sweetbay customers, losing their store won't be easy.

"I've come here every week for many, many years, even before when it was a Kash n' Karry,'' said Johanne Harrison, 74, while shopping at the Oak Tree Plaza store at 6095 Ninth Ave. N, in St. Petersburg.

"I like it because it's never busy,'' she said, acknowledging that in hindsight that probably wasn't a good thing.

Sweetbay started informing employees about the closures on Wednesday. Those eligible would receive severance packages. Some may be transferred to other stores.

"We are being extremely sensitive with every employee,'' Le­Beau said Thursday. "There's no smiling face here today.''

Jeff Harrington contributed to this report. Susan Thurston can be reached at sthurston@tampabay.com or (813) 225-3110.

Who is the Delhaize Group?

Delhaize Group is a Belgium-based food retailer. The company is principally engaged in the operation of supermarkets in Belgium, the United States (Southeast and Mid-Atlantic as well as Northeast and Sweetbay in Florida), Greece, Serbia, Bosnia and Herzegovina, Albania, Montenegro, Bulgaria, Romania and Indonesia.

The company operates different supermarket brands and formulas: In the United States, where it is the fifth largest supermarket operator, it operates the Food Lion, Bottom Dollar Food, Harveys, Sweetbay, Bloom and Hannaford brands. Overseas it operates Delhaize, AD Delhaize, Delhaize City, Proxy, Red Market, Shop 'n Go and Tom & Co in Belgium and Luxembourg; Maxi, Tempo and Mini Maxi in Montenegro; Maxi and Tempo in Serbia; Mini Maxi, Maxi, Tempo and Tempo Express in Bosnia; Piccadilly in Bulgaria; Alfa Beta in Greece; Shop & Go and Mega Image in Romania; Super Indo in Indonesia.

The company has 158,000 employees and a market capitalization of $4.3 billion.

Sweetbay timeline

1947 | Salvatore Greco, who initially sold fruits and vegetables on the streets of Tampa in 1914, and his wife, Giuseppina, open the first Big Barn grocery store in Plant City. Under the name Tampa Wholesale Co., the chain grows to nine stores. Principal shareholders are the Greco and Dominguez families.
1962 | Tampa Wholesale decides on a new name: Kash n' Karry.
1970s | The chain expands, partly by acquiring A&P grocery stores. In 1974, it opens a supermarket-drugstore in Tampa, with Kare Drugs.
March 1979 | Kash n' Karry is sold to the California-based Lucky Stores Inc. It becomes a regional chain and by 1984 owns 84 stores.
1989 | After American Stores Inc. buys Lucky for its California stores, it sells Kash n' Karry in a leveraged buyout. In the meantime, the chain acquires more than 20 stores from Kroger.
1994 | Kash n' Karry files for Chapter 11 bankruptcy. It goes public in 1995.
1996 | The 105-store Kash n' Karry Food Stores is purchased by Food Lion, a subsidiary of the Belgium-based Delhaize Group.
January 2004 | The chain announces it will close 34 unprofitable stores.
March 2004 | A new chain, Sweetbay Supermarkets, is created from Kash n' Karry. Along with a new name, it plans to remodel stores, expand selection and establish a customer-friendly culture. Sweetbay is a type of magnolia tree commonly known as swamp magnolia. Marketers purposely made "supermarket" singular so it would sound more like a neighborhood market than a big chain.
August 2007 | The last Kash n' Karry store closes in Crystal River.
October 2007 | The Tampa grocer cuts prices on 1,000 of the most commonly purchased groceries. After years of shrinking, Sweetbay gets cash to open four to five stores annually and set up a remodeling schedule. It eventually owns 108 stores.
2011 | Sweetbay has 106 stores located in west-central Florida (from Gainesville, to Naples and eastward to Lakeland).
Wednesday | Sweetbay announces that it will close 33 stores – including 22 in the Tampa Bay area – leaving the chain with 72 stores.

Sources: Sweetbay Supermarkets, Groceteria.com, Times files

Sweetbay Supermarket to close 33 stores in Florida 01/17/13 [Last modified: Friday, January 18, 2013 12:21am]
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