Niche markets face off with Publix and Walmart for a bigger piece of the retail pie.
It’s the most wonderful time of year…to eat. Holiday feasts are now in the planning stages.
That makes this season especially wonderful for retail grocers in Florida. Recently, the number of supermarket chains operating in Florida has expanded. Florida now has 20 million mouths to feed as the third-most populous state in the nation.
With that in mind, what’s driving this competition for your grocery dollar and who’s poised to bag the biggest share?
Evolve or die
Phil Lempert, founder of SupermarketGuru.com and food trends editor for NBC’s Today, has studied this $600-billion industry for 25 years. He has a bold prediction. “Grocery stores [as we know them today] are going to be extinct not in 50 or 100 years, but in 10.” In an interview with Chris Morris of Fortune, Lempert said rapid growth in home delivery and smaller-capacity stores are the future. “Health and wellness are more important in supermarkets [for millennials…their] parents and grandparents just wanted to see more, more, more.”
Share values of some chains with the biggest stores are already falling. Lakeland-based Publix Super Markets Inc., which is privately held, is the state’s largest grocer with more than 740 locations (1,100 total). But third-quarter 2015 results released Nov. 2 showed a slight dip in share value despite a 6.4 percent increase in sales and a $1.4 billion profit.
All shares are owned by employees, so there’s an internal incentive to keep Publix ahead of the pack. “We’re not motivated by competitors, only by customers,” said Maria Brous, the grocer’s director of media and community relations.

Chief rival to Publix for those customers is Walmart Stores, Inc. In Central Florida alone, it controls more than 30 percent of the market, while Publix leads with 40 percent.* But after releasing disappointing third-quarter earnings in October, Walmart’s share price fell 10 percent.
Other grocers are struggling. Albertsons’ IPO of 65.3 million shares to raise $2 billion was slowed by tepid growth and more than $12 billion of debt from the Safeway merger this past January. In the 12 months ending June 20, Albertsons suffered a net $413 million loss; $126 million of that was in first quarter 2015.
Now third in Florida, the 518-store Winn-Dixie chain based in Jacksonville is Southeastern Grocer’s key brand in the state (it also owns Bi-Lo and Harveys). In October, Southeastern Grocer announced it will lay off 250 company wide. Shortly thereafter, Winn-Dixie abruptly revised its sales strategy and permanently discounted around 1,500 high-volume staples to try and win more customers.
Organic grocer Whole Foods Market also cut prices to combat a 2.1 percent third-quarter decline in same-store sales nationwide. This strategy could further impact falling margins and share value. At one point this year, Whole Foods’ stock price dropped 40 percent.
Despite this, there’s no shortage of competition. Kroger has completed its acquisition of Harris Teeter, discount grocer Aldi is undertaking a five-year, $3 billion expansion and fellow German supermarket chain Lidl plans to enter the U.S. market.
In Florida, retailers are drawn to the growing population and economy. As consumer tastes evolve, some chains specializing in natural or organic products are expanding there:

Earth Fare Inc. ― A privately held, Fletcher, N.C.-based organic grocer originated in the 1970s and now has stores in Gainesville, Jacksonville and Tallahassee. It’s actively seeking retail property in metro Orlando.
Lucky’s Market ― Founded in 2003, this natural foods grocer has but a single store in Gainesville. “But that location is one of our company’s top performers,” says Marketing Director Ben Friedland. The privately held, Boulder Colo.-based chain has 16 stores in 11 states and is adding new locations in Coral Springs, Melbourne, Naples and Plantation. “Florida is important to us, so we’re also considering sites around Tallahassee and Orlando,” said Friedland.
Sprouts Farmers Market Inc. ― This publicly traded company with 200 stores in 13 states was founded in 2002 in Scottsdale, Ariz. Sprouts recently added locations in Alabama, Georgia, Missouri and Tennessee. It has no Florida stores yet but is rumored to be pursuing sites in Orlando and Tampa, along with a third-party distribution center.
Trader Joe’s ― Started in 1967, this California-based chain of 450-plus organic-oriented stores is owned by the same privately held company as Aldi. Trader Joe’s recently opened a new location in Fort Lauderdale, its eighth in South Florida and 17th in the state during just the past two years.
In Part 2 of our three-part series, we’ll look at how big-name chains plan to stay ahead of this fresh competition.
*Source: The Shelby Report