- Southeastern Grocers announced a quick exit from Chapter 11 bankruptcy late last week, according to a company release. The company’s financial restructuring included reducing its $1 billion debt level by $600 million, including $522 that was offloaded in a debt-for-equity swap.
- The company, which operates more than 575 stores, plans to remodel 100 locations this year. It has updated 28 so far. Southeastern said it also plans to launch a new customer rewards program next month.
- "It is an exciting new day for Southeastern Grocers as we emerge a stronger company with an optimal store footprint that is well-positioned to thrive in the competitive retail market,” Anthony Hucker, president and CEO of Southeastern Grocers, said in a statement.
Southeastern Grocers has been slow to respond to industry trends, and as a result its stores have fallen behind the times. Now that the company is out from under a mountain of debt, it’s hoping to speed up remodels and customer initiatives that will help it better compete in today’s retail environment.
A lot will ride on the company’s store updates, which focus on localized product assortment and meal options. A recently updated Winn-Dixie in St. Johns County, Florida featured pizza and sub sandwich stations, along with 1,400 new natural and organic products. Other updates have included revamped produce departments, expanded beer and liquor sections and a larger footprint for deli.
As CEO Anthony Hucker told reporters and shoppers at the St. John’s store’s opening, Southeastern is using boots-on-the-ground research and data analytics to customize each location to its shoppers. In St. Johns County, the company found that 62% of shoppers surveyed said they typically don’t plan dinner until after 4pm.
In addition to Winn-Dixie and Bi-Lo updates, Southeastern has stepped up the conversion rate for its Harveys and Fresco Y Mas specialized formats. The discount Harveys banner, the company has found, is a good fit in lower-income areas, while Fresco Y Mas allows Southeastern to stay relevant in regions where Hispanic shoppers have increased.
Fresco Y Mas, in particular, has produced solid results for the company as the Hispanic population continues to grow in states like Florida. The U.S. Hispanic population is set to double over the next 40 years, while a recent study by Acosta and Univision found that these shoppers are more profitable, with a preference for fresh foods and building large baskets.
Southeastern could very well turn things around. It has a highly experienced management team that’s making a lot of smart moves. There’s also recent precedent for a legacy chain improving its fortunes through strategic remodels. Food Lion, which is in the midst of a multibillion-dollar revamp, has fended off competitors like Lidl and earned call-outs from parent company Ahold Delhaize in recent earnings calls.
At the same time, Southeastern seems to be playing catch-up amid an abundance of competitive threats. Can it hold on to customers as Walmart continues to lower prices and innovate in e-commerce? Does it stand a chance of winning shoppers back from Publix? Growing its sales and drawing new customers will be a challenge, and it won’t come cheaply for the restructured company.