ALDI to acquire Winn-Dixie

[ClownLoach]

The big question is how is Aldi going to take over the stores? For leased stores, are they just going to eat the other two-thirds of the store and leave it dark? For owned stores, are they going to play landlord and lease it back? Or is SEG going to remain on the hook for the leases when they do a convenient bankruptcy and have all of them voided?

Aldi will sublease the unused portion. Every lease takeover I have seen was a full store (One was even a former WD) and they were able to sublease it all. Seems their little store draws traffic. A few cases in point:

Longview, TX: 1725 NW Loop 281. This store was originally a TG&Y Family Center that was twice leased to Hobby Lobby, who expanded it greatly over the years. It's now sublet to Aldi and Bealls Outlet.

New Iberia, LA: 1102 Admiral Doyle Dr. Originally New Iberia's second Walmart, the entrance section was Stage; It was divided between Aldi and Five Below. (Big Lots has occupied this center three times; twice in the garden/auto end of this same building).

Lafayette, LA: 4518 Ambassador Caffery. The aforementioned WD, which closed long ago. It is now Aldi and Club4 Fitness. This is currently the retail hotspot. Costco, SuperTarget, a large Academy and Whole Foods are within visual of this location.

That doesn't mean that the master lease will allow a sublease. Many landlords don't permit this. Aldi just happens to find a lot that will, or finds distressed properties that the landlord is so desperate on that they'll play "lets make a deal" and give up those rights. Also as mentioned elsewhere, building codes come into play here. This might be a good way to do things in the Southeast. Building codes out west are different and depending on the size of the building if Aldi came to town and acquired an operation intent on downsizing it they would potentially have to have demising walls put in (basically separating the building into two completely independent buildings). For example a fairly modern closed Lowe's building in San Marcos had to go through that process, so it took almost two years of construction to tear into the foundation, build the footings for the new wall, separate all systems HVAC/Fire Sprinklers/Plumbing/Sewage/Electrical, and finally build the wall to permanently separate the buildings. The good news is if either Hobby Lobby or Winco ever wanted to tear down their side of the store they could do so without any harm to the other side.

[cjd]

If they try to Aldi-fy WD/Harvey’s expect to lose many customers. Southeners have major brand loyalty and they expect departments like bakeries and full service meat departments. They can’t just sell Kraft mayonnaise as their sole national brand and not sell Duke’s., or vacuum-packed meat cuts.

Fully agree on that. And also, a big reason why I think this is a terrible decision.

Sure this gets Aldi real estate in a hurry.

But many of these Winn Dixie stores fall into 2 categories:

Towns where Winn Dixie is the ONLY full service grocery store that exists. There may be a Walmart or a Sav A Lot but there’s often not much else since Winn Dixie bought out a Sweetbay and took those stores over. Publix has moved into a few towns since then, but not many.

These residents won’t be happy about Aldi taking this away.

Then there are larger towns like mine that already have an Aldi. Practically across the street from Winn Dixie. We all know Alsi isn’t going to run two adjacent ALDIs and the FTC won’t allow it.

My town even has a second Winn Dixie.

So hello lots of vacant useless real estate and blighted shopping centers. There aren’t any independent grocers that can take over these full size soon to be former Winn Dixie stores. I remember it failing when WD closed its existing stores and kept the former Sweetbays.

I think there definitely is a niche for Winn Dixie to remain, but they’ve never had the capital to compete with Publix.

I was under the impression that Winn Dixie was starting to become healthy again. Their sales were up this year, remodels still occurring and even some brand new stores have been opening here and there. I was impressed with the recently remodeled one here and traffic had picked up the last couple years since the redo.

I’d like to see Aldi bring deep financial pockets and management strength to boost WinnDixie even more into finally being a long term viable competitor to Publix.

[Romr123]

Could Aldi be thinking about using W-D as their Lidl-flanker----slightly larger stores, appropriate for that "second" store situation in a smaller community; retaining a lower-cost full-ish service option in larger communities.

A thought experiment: combining W-D with Food Lion (getting Ahold out of that aspect of the market) serving to "box in" Lidl?????

[bryceleinan]

Read a blurb on Reddit that all Winn Dixie pharmacies will close by December. Not surprising considering WD had closed so many on their own the last few years.

But it certainly points to the fact that Aldo has zero plans to keep any Winn Dixie stores in tact.

I hate the blight that this is going to cause. In the small towns without Aldi it’s one thing to convert the only WD to Aldi.

But in ones like mine that already have an Aldi and two Winn Dixie’s we’re going to be left with a lot of chunks of vacancies in strip malls. And we already have practically every trendy new retailer in our already broken up former spaces like Gold’s Gym and Books A Million, so what do you do?

Saw the same thing on X/Twitter. Rumored to be the 3 letter chain.

[storewanderer]

I really question the motives for Aldi to "acquire" Winn Dixie. I feel like they are somehow making a big help out to Publix to get rid of what is basically the last conventional competitor in many Publix markets and also a real help out to Wal Mart to get rid of this competitor once and for all.

This is a transaction FTC also should not approve.

I also question what Aldi wants with Winn Dixie buildings. These buildings are the wrong shape and size for Aldi Stores, many are old, not located particularly correctly for Aldi, and/or in markets where Aldi already has strong presence/is saturated. So again what is the motive here?

These immediate rumors about pharmacies closing seem like just that, a rumor, because typically when a pharmacy closes there isn't a bunch of advance notice, an announcement is made and the closure happens very suddenly. It would be very unusual for pharmacy closures to be leaked now that are supposedly taking place in December. Anything is possible but this would be highly unusual.

Maybe they'll actually run Winn Dixie as it is...

I wonder if there is a debt time bomb with the current Winn Dixie and the interest rate hikes have brought it to a nasty head where they basically have to sell out or go under. I hate to say that may be a better outcome than Aldi because I expect if that were to happen in a fire sale situation a lot of small regional chains, the Ingles, the random Kroger, and even the random Publix would take some stores over and keep running them as full conventional supermarkets. And we all know they've been shopping Winn Dixie to buyers for years

[cjd]

Saw the same thing on X/Twitter. Rumored to be the 3 letter chain.

To be fair, this is actually a WD decision, as the sale won’t finalized until into next year.

[wnetmacman]

That doesn't mean that the master lease will allow a sublease. Many landlords don't permit this. Aldi just happens to find a lot that will, or finds distressed properties that the landlord is so desperate on that they'll play "lets make a deal" and give up those rights. Also as mentioned elsewhere, building codes come into play here. This might be a good way to do things in the Southeast. Building codes out west are different and depending on the size of the building if Aldi came to town and acquired an operation intent on downsizing it they would potentially have to have demising walls put in (basically separating the building into two completely independent buildings). For example a fairly modern closed Lowe's building in San Marcos had to go through that process, so it took almost two years of construction to tear into the foundation, build the footings for the new wall, separate all systems HVAC/Fire Sprinklers/Plumbing/Sewage/Electrical, and finally build the wall to permanently separate the buildings. The good news is if either Hobby Lobby or Winco ever wanted to tear down their side of the store they could do so without any harm to the other side.

When it comes to WD, while they may not own their buildings, they have long been known to keep an iron fist on the lease, thus so many empty former stores. When the 2005 bankruptcy came down, they shed *thousands* of dark stores throughout their current and former footprint.

Having said this, most of the SEG landlord base is fully aware of the current situation and condition of the company, and will do whatever it takes to get properties leased. Remember that a dark property is unprofitable. Most landlords would far rather have half filled and half slow than nothing at all. And the average Aldi will do much more business than the average WD.

[storewanderer]

And the average Aldi will do much more business than the average WD.

This is a sad reality.

Tough to see Aldi accepting that level of poor performance for long... but we will see.

Other thing is over the years it has felt like Winn Dixie has had periods where it improves/does better.. but they can never get a constant momentum going.

[veteran+]

Does this mean that W/D's average store volume was (is) less than $200,000.00 per week?

I find that hard to believe.

Aldi's average volume is less than 200k/wk.

[wnetmacman]

Does this mean that W/D's average store volume was (is) less than $200,000.00 per week?

I find that hard to believe.

Aldi's average volume is less than 200k/wk.

Do you have a source for this number? I would find that hard to believe. Also, we're talking about just half the store; the other half would be drawing traffic too.