SOME TRADITIONAL RETAILERS NEED A NEW COMPETENCY

Another bleak chapter in the annals of supermarket history was written last week when, moments after midnight last Tuesday, 80-year-old Winn-Dixie Stores said it had filed for Chapter 11 bankruptcy the previous day.Apart from its timing, Winn-Dixie's capitulation came as little surprise. The move had been predicted repeatedly in these pages and elsewhere. It was earlier thought that despite a disastrous

Another bleak chapter in the annals of supermarket history was written last week when, moments after midnight last Tuesday, 80-year-old Winn-Dixie Stores said it had filed for Chapter 11 bankruptcy the previous day.

Apart from its timing, Winn-Dixie's capitulation came as little surprise. The move had been predicted repeatedly in these pages and elsewhere. It was earlier thought that despite a disastrous second-quarter loss of $400 million, sufficient cash flow and borrowing capacity might remain to stave off bankruptcy for a time. Two weeks ago, though, Winn-Dixie acknowledged it had overstated its borrowing ability by $100 million. With that, it appears, bondholders started to press Winn-Dixie toward immediate action.

Now, Peter Lynch, Winn-Dixie's newly installed president and chief executive officer, is going to have to pull rabbits out of the hat, and do so much more quickly than he anticipated. What rabbits? In a statement, Lynch said, in part: "We will focus on increasing sales quickly and cost-effectively across the chain by improving the execution of merchandising and sales-focused initiatives, reinvigorating the company's store associates, and restoring a sales-driven culture across the organization. These plans include enhancing Winn-Dixie's perishables offerings and other product merchandising ... [and] store-sales competitions. ..."

Well, best of luck to him, but changing the culture of an organization is difficult to do, especially against the backdrop of bankruptcy. Moreover, it's not as if nothing in these regards has been tried before. As we reviewed in this space on Feb. 16, 2004, some permutation of this process has been under way for a score of years, or longer.

In 1988, the late James Kufeldt, then Winn-Dixie's newly installed president, said the company is "trying to satisfy customers' total needs."

In 1992, he said, the company was seeking "all the services customers want, [including] enlarged produce." Earlier this year, Frank Lazaran, then Winn-Dixie's newly installed president and CEO, said the company would seek to learn customer preferences, then position itself "based on price, service, convenience and product assortment."

Let's consider this: Maybe the day has arrived for Winn-Dixie, and some other companies, to acknowledge that the core competency that served them well a couple of decades ago is no longer relevant. (See also "Crossroads," Page 18.)

Maybe another capitulation is in order: the recognition that the most excellent traditional supermarket that can be leveraged from existing substance won't be sufficient to the challenge.

Instead, why not leave the traditional supermarket business altogether? The business could be moved well up the retailing spectrum, or well down. To move up would imply a high-service, high-quality offer, such as that of Whole Foods; an exceedingly difficult metamorphosis, so let's look elsewhere. At the lower end is the price-impact approach driven by limited stockkeeping units and low overhead, not unlike what Aldi does. It may be that Winn-Dixie, with its plethora of modestly sized sites, is well positioned to make such a change.

That would remove the hapless company from the vice, one jaw of which is Wal-Mart Stores' low prices, the other of which is Publix Super Markets' high quality and service.