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Speeding toward Sweetbay

The upscale remake of Kash n' Karry is going so well, the company wants to convert all the stores, and do it sooner.

By MARK ALBRIGHT
Published August 12, 2005

[Times photo: Dirk Shadd]

A new Sweetbay supermarket is being built on the northeast corner of 22nd Street South and 18th Avenue in the Midtown area of St. Petersburg. Most of the store's locations are remodeled Kash n' Karry stores.

The Belgian Delhaize Group has decided its new Sweetbay Supermarkets have put up such stellar numbers that the conversion of the rest of its aging Kash n' Karry chain will be accelerated.

The decision means every one of the chain's 108 stores from Naples to Pasco County will become Sweetbays a year earlier. That means a major remodeling, a dramatically expanded assortment, a far bigger selection of perishables and beefed-up staffing.

"So instead of turning 20 to 25 Tampa Bay area Kash n' Karrys into Sweetbays in 2006, we will do 49 or 50," said Shelly Broader, president and chief operating officer of the Delhaize unit based in Tampa. "This will touch every one of our stores."

The typical Sweetbay store employs about 30 more people than a Kash n' Karry. So the chain's payroll will increase by about 3,000 to more than 10,000 by the time the last conversion is completed in early 2007.

While every store will change, the stores built in the past few years probably will get mostly cosmetic changes in fixtures. Up to five unidentified stores will be closed because the competitive landscape in their neighborhood has changed. The most sweeping remodelings, from new floors to ceilings, will be in the majority of Kash n' Karry stores that have not been overhauled since the last chain-wide remodeling in 1996.

Delhaize decided to junk the Kash n' Karry name and strategy two years ago to fight the incursion of Wal-Mart. Wal-Mart's Supercenters parlayed a low-price strategy to quickly capture third place in the market behind industry-leading Publix Supermarkets and Kash n' Karry. The chain also has been adding Neighbormarkets, which are a conventional supermarket.

Delhaize, which owns 2,600 stores globally, retreated from Kash n' Karry's ill-fated move into Orlando to circle the wagons on the west coast of Florida. Instead of cosmetic changes, new management led by Broader decided to start all over with a new name, layout and company. Like many traditional grocers who cannot compete on price with Wal-Mart, the foundations of Sweetbay are in more service departments, better meat and produce and a much more comprehensive selection of dry groceries and frozen entrees than Wal-Mart stocks.

"We had planned to do this conversion over three years," said Ron Hodge, chief executive of Delhaize's Hannaford operation in New England, which controls Kash n' Karry.

"But the results have been so good we are moving it up a year."

Only a few Sweetbay stores have opened in the Tampa Bay area, the chain's hometown market. The new approach was tested first in Fort Myers and is moving into Sarasota and Manatee counties.

Sales in the first 13 Kash n' Karry stores converted in Southwest Florida rose a stunning 40 percent in their first six months. Two other factors are adding pressure to do something dramatic quickly: Kash n' Karry has been losing market share. That trend got worse in the second quarter among the aging Kash n' Karry stores that were not converted to Sweetbay, which slumped below the company's plan.

Meantime, 12 Winn-Dixie stores in the bay area, including one in Tampa that operates as a Save Rite, will close next month as part of that chain's Chapter 11 bankruptcy.

Only one, a Winn-Dixie in Clearwater's Northwood Plaza that was acquired by Publix, has a buyer.

While 102 of the 326 Winn-Dixies being shuttered across the Southeast have buyers with plans to keep them as grocery stores, 224 are being auctioned off for other uses. Delhaize bought 19 Winn-Dixies to add to its Food Lion chain, but none in Florida.

"We see the closing of 100 Winn-Dixies that compete directly with Food Lion, Sweetbay and Kash n' Karry stores as an opportunity to gain market share," said Carole Herndon, chief accounting officer of Delhaize U.S. "There will be disruption in the marketplace because of Winn-Dixie's liquidation sales so we think we can gain customers by being more aggressive now."

Mark Albright can be reached at albright@sptimes.com or 727 893-8252.

[Last modified August 12, 2005, 00:46:18]