- By Jeff Ostrowski Palm Beach Post Staff Writer
Floridians of a certain age recall when going to the grocery store meant choosing between Publix and Winn-Dixie.
As recently as 20 years ago, the grocers were evenly matched rivals running neck and neck. In 1997, Winn-Dixie operated 424 stores in Florida, while Publix ran 446 supermarkets.
Fast forward two decades, and there’s no longer a contest. Winn-Dixie, hampered by bankruptcies, shoddy customer service and downtrodden locations, has faded into a distant second despite new branding campaigns to freshen its image.
Publix has so thoroughly vanquished Winn-Dixie that it has seven times as many Palm Beach County locations as Winn-Dixie. And Lakeland-based Publix has more Palm Beach County markets than all other grocers combined.
That’s according to research by Josh Ladle, a broker at commercial real estate firm Avison Young. He visited 130 grocery-anchored shopping centers in Palm Beach County to compile an almost-comprehensive list of supermarkets. The results:
No other grocery chain has more than six locations. Whole Foods and Trader Joe’s have four each, while Aldi has six.
“They’ve really let Publix have their way,” said David Livingston, a supermarket analyst in Milwaukee. “Publix obviously delivers a better product.”
Once a major player in Florida’s grocery wars, Winn-Dixie rode a string of lackluster customer service and financial woes into near-oblivion.
“The quality was just so much better at Publix that they took all the market,” Ladle said.
Consumer Reports this year rated Publix the nation’s fourth-best grocer. Winn-Dixie finished 52nd.
Winn-Dixie’s indifference to cleanliness became legendary, as did its choice of subpar shopping centers.
“Winn-Dixies were in the old, tired locations,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business. “There were four empty spaces on one side, and a lawnmower repair shop on the other side.”
Indeed, Ladle’s research upheld the perception that Publix’s plazas thrive while Winn-Dixie centers languish. The vacancy rate at Publix-anchored plazas in Palm Beach County is just 8.4 percent, compared to 16.8 percent at Winn-Dixie properties, Ladle found. However, he said, the numbers were skewed because a number of the Winn-Dixie centers are being redeveloped.
Despite the lopsided numbers, Winn-Dixie insists it hasn’t given up.
“We are still a very strong player in the Florida grocery market,” said Joe Caldwell, spokesman for Winn-Dixie parent Southeast Grocers. “In 2016, we launched our new Hispanic supermarket, Fresco y Más, which has now grown to 18 stores throughout Miami-Dade, Broward and Palm Beach counties. Additionally, we recently expanded our Harveys Supermarkets banner throughout Florida, which is yet another example of how we’re listening to our customers and tailoring our stores to meet the needs of individual communities.”
Now that the state’s dominant grocer has marked its territory, Publix is pinching out rivals by opening new stores wherever it can. The result, Ladle said, is that it would be difficult for a rival to mount a significant challenge to Publix, which has claimed the prime locations.
“It’s hard to find good corners when all the prime intersections already have been taken,” Ladle said.
Publix’s latest real estate strategy sees it blanketing Palm Beach County with supermarkets by opening stores that are close to older stores. The new Publix at 500 Belvedere Road in West Palm Beach is just a mile from the Publix at 828 Southern Blvd, two miles from the Publix at CityPlace, three miles from the Publix in Palm Beach, four miles from the Publix on Village Boulevard and five miles from a Publix on Military Trail.
The Publix under construction at the Plaza del Mar in Manalapan is only two miles from the Publix at 1589 W. Lantana Road in Lantana.
By covering Palm Beach County with stores, Publix might be staying ahead of Amazon, which is widely expected to push into the business of delivering groceries. The Seattle-based giant is seeking regulatory approval to buy Whole Foods for $14 billion.
“The antidote to delivery is convenience,” Gordon said.
In other words, if you pass three Publix locations during your commute, you might decide it’s easier to go to the store than to order a delivery from Amazon.
Publix’s dominance means that, in Palm Beach County, the days of old-fashioned grocery wars seem to be gone. While Kroger and Publix are going head to head in Atlanta, that’s not the case here.
As Publix has vanquished Winn-Dixie, its sales have climbed steadily. Publix’s sales totaled $34 billion in 2016, and the employee-owned company operates 1,136 stores, including 774 in Florida.
Profit margins have climbed, too. In 2003, when Winn-Dixie was still a viable rival, Publix’s profit margin was 3.9 percent. As Winn-Dixie withered, Publix’s profit margins marched upward, reaching 6.1 percent in 2015.
That would be considered a weak profit margin in the software industry, but in the notoriously low-margin supermarket business, 6 percent represents a robust return. By contrast, grocery giant Kroger routinely posts profit margins of less than 2 percent.
The obvious question: Are Florida consumers getting the best deal without two dominant supermarkets doing battle? Publix ranks high in customer satisfaction, but a little rivalry never hurts, Gordon said.
“Nothing keeps the prices as sharp, nothing keeps the stores as clean, as competition,” he said.
But Livingston, the supermarket analyst, said that even without a clear No. 2 supermarket chain in Florida, Publix still feels pressure from Walmart, Costco, Aldi and others.
“No one can complain that they’re paying too much for groceries, or that they have to drive too far,” Livingston said. “I think the needs of consumers are being met.”