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Sweetbay wounded in grocery wars fought on price, quality

What to do when you're an aging grocery brand striving not just to survive but compete against heavyweight Publix Super Markets and the thundering invasion of Walmart — the world's biggest retailer?

Nine years ago, Kash n' Karry and its Belgian parent, the Delhaize Group, opted for a new strategy and new name: Sweetbay Supermarket. The idea at the time was to redesign its stores and make itself more upscale. Sweetbay became a cheaper-priced version of Publix and tried to hold on to what was in 2004 an impressive No. 2 market share in this region among supermarkets.

Then the grocery battle intensified.

Sweetbay this week said it will cut 2,000 jobs and shut 33 weak stores by mid February. That leaves just 72 locations to fight an uphill fight, mostly in the Tampa Bay area and south to Fort Myers.

In a conference call Thursday, Delhaize chief financial officer Pierre Bouchut hinted the parent company is not done with Sweetbay.

"We decided to close the loss-making stores, and we believe that this is a sensible decision," he said. "Regarding the strategy on the remaining stores and how it fits within Delhaize, we thought strategically about this. And what we are announcing today is a first step to stop the bleeding at a loss-making operation, and definitely over time a more structural solution for the rest of Sweetbay would be a logical step."

Lakeland-based Publix sits solidly in its No. 1 spot among Tampa Bay and Florida grocers. Walmart long ago blew by Sweetbay and Winn-Dixie to become No. 2. Combined, Publix and Walmart now grab 70 cents of every $1 spent on groceries here.

In a metro market where Publix offers convenience, quality service and an incomparable in-store bakery, and where Walmart and sister chain Sam's Club increasingly offer lower-priced options, what can middle-of-the-road Sweetbay bring to the table?

A diminished Sweetbay must now supply a good answer to area consumers.

Shoppers consider many other variables when deciding where to buy food.

Location counts. Publix, with 768 stores in Florida, is famous for demographic analysis and building new stores where it anticipates growing populations. Walmart employs similar tactics. Sweetbay lacked the financial muscle to keep up with such real estate investments.

Cleanliness and good service count. Sweetbay remodeled Kash n' Karry into brighter, more compelling stores. But Sweetbay slowly grew fatigued. Stores often seem down to one or two cashiers — good cost control, perhaps, but an unfortunate reminder of few customers.

Good marketing also counts. Publix aggressively employs BOGO (buy one, get one) promotions that can drive prices lower than Walmart. Day to day, Walmart underprices Publix (and everybody else) but typically does not have the same range of goods and brands.

Sweetbay's latest ad campaign features "Kevin the Butcher," so enamored with the store's meat quality and value that he tries to change Sweetbay's name to Meatbay.

What was amusing, now seems bittersweet. No word if Kevin is among the thousands losing their jobs.

Robert Trigaux can be reached at trigaux@tampabay.com.

Sweetbay wounded in grocery wars fought on price, quality 01/17/13 [Last modified: Friday, January 18, 2013 7:09am]
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