Getting Better All the TIme
from Trust the Leaders Issue 15, Spring 2006
Recently, Peter Lynch, CEO of Winn-Dixie Stores, Inc., traveled to New Orleans to survey the company’s stores affected by Hurricane Katrina and meet with his extended family — Winn-Dixie associates. Many associates were dealing with personal challenges and loss in addition to helping Winn-Dixie recover from Katrina damage.
But where you might expect to find tired, downtrodden attitudes, Lynch instead found energized people who were enthusiastic and more committed than ever to help rebuild Winn-Dixie, and in turn, New Orleans. This attitude was aptly captured in the headline of a recent Wall Street Journal feature on Winn-Dixie titled “Aisles of Optimism.”
This positive attitude reflects the company today and is evident among the thousands of associates working in the nearly 600 Winn-Dixie stores across the Southeast. That optimism is also underscored in the company’s new branding effort, “Getting Better All the Time.” The campaign is not mere aspiration, but rather an accurate reflection of the Jacksonville-based grocer’s resolve to make changes and emerge this summer from federal bankruptcy protection as the vital business, employer and community partner it has strived to be for the previous 80 years.
Leading Winn-Dixie’s turnaround is Lynch, 54, a Boston native and 37-year veteran of the grocery industry. Lynch turned around Acme, a Philadelphia-based grocer, and was President and Chief Operating Officer at Albertson’s, Inc. prior to joining Winn-Dixie in December 2004.
“Winn-Dixie was never broken, just tarnished,” insists Lynch. “It is a company with a strong heritage and deep roots in the Southeast. It just needed some attention.”
Storm Clouds Gather
Winn-Dixie Stores, Inc. began in 1925 in Miami and, by the early 1990s, was one of the country’s 10 largest grocers and the largest in the Southeast. But as the 21st century dawned, the emergence of massive discounters and upscale chains put the squeeze on the company. In 2004, four major hurricanes added to the company’s woes, and at year’s end, then-CEO Frank Lazaran was replaced by Lynch. In February 2005, less than 10 weeks after joining the company, Lynch sought Chapter 11 bankruptcy protection for Winn-Dixie.
“It was one of the most difficult decisions I’ve ever made,” said Lynch. “It’s a move that no one wants to make, but it has allowed us to make a number of significant changes in a relatively short time. What is propelling our company is our associates’ enthusiasm to prove our critics wrong and emerge as a stronger, more viable company.”
Hurricane Season - Setbacks and Opportunities
As if the hurricanes of 2004 and the bankruptcy filing weren’t enough to keep Lynch and his management team occupied, the 2005 storm season also left its mark. But the seemingly nonstop punches from four more major hurricanes revealed the company’s strength — something many of its critics had not seen or counted on.
Each time a tropical storm or hurricane threatened, Winn-Dixie stores remained open later than competitors’ prior to the storm’s landfall, and reopened sooner. Prior to each storm, truckloads of bottled water and ice were staged at Winn-Dixie’s regional distribution centers. As soon as the storm passed, the trucks moved toward the hardest-hit areas, where their loads were given out free of charge to those in need. At the same time, company response teams sprang into action, inspecting stores for damage, making repairs and doing whatever necessary to reopen as quickly as possible — including bringing in truck-sized generators to power entire stores until utility services were restored.
Prior to Hurricane Katrina, Winn-Dixie had 43 stores in the New Orleans metro area. As of late February, 34 had reopened and several more are being rebuilt. “There is no doubt the city will be rebuilt, and a sign that a neighborhood is returning to normal is when the area’s grocery store reopens,” Lynch explains. “We recognized there would be a tremendous upside for us and the community if we could quickly reopen as many of our stores as possible, and that’s what we did.” Stores in other locations, such as the Crawfordville, Florida store pictured on page 29, have been remodeled and are now open for business.
The work of Winn-Dixie associates and management both during and after the hurricanes is indicative of the company’s broad philanthropic efforts throughout its history. While it has helped a myriad of organizations, the company has always had a special affinity for children’s charities and health organizations. The company’s broad philanthropic efforts have included helping to bring a Mayo Clinic to Jacksonville and funding three American Cancer Society/Winn-Dixie Hope Lodges for cancer patients and their families.
“We started as a family company, and although we’ve grown into a Fortune 500 company, we’re still a family,” notes Larry Appel, Winn-Dixie’s General Counsel. “We do what any family does: give back to improve our community. We’ve done that for 80 years — it’s a part of the Winn-Dixie heritage.”
In June 2005, Lynch announced the company would sell or close 326 of its 916 stores as well as several canning and manufacturing facilities, dairy plants and warehouses. The move, while painful, allowed the company to exit expensive leases on under-performing stores.
“Creating a smaller, but more profitable, store base will best position Winn-Dixie for long-term financial health and a successful future. We are focusing our resources on markets where Winn-Dixie has a strong presence and there are compelling opportunities,” Lynch told associates prior to the announcement.
Peter Lynch’s schedule includes frequent in-store meetings with Winn-Dixie associates.
The new operating footprint has resulted in a more compact supply chain. The company’s operating area now includes stores throughout Florida, most of Louisiana and the southern portions of Mississippi, Alabama and Georgia. At the same time, Winn-Dixie’s merchandising, marketing and operations teams were working behind the scenes on a host of significant store and service improvements. Upgrades in the stores’ fresh produce and meat sections were enthusiastically received by customers, who also responded positively to a renewed attention to personalized service by associates.
“For a company like ours to succeed, the challenge is to hold on to our heritage as a family, while making changes that build for the future,” said Lynch. “It’s a paradigm shift of how we run our business. We lost our way and we have to shift the culture while embracing our history. Communication is the key.”
Getting Better
Winn-Dixie’s customers are also noticing a difference. Customer compliments are at an all-time high. And Winn-Dixie’s improvement is also reflected on the company’s balance sheet, as stores register higher sales numbers compared to the previous year.
The company is working hard to emerge from Chapter 11 this summer. Keeping the thousands of associates up to date on the company’s progress and additional improvements to stores remains a priority. Lynch has visited over half of the company’s nearly 600 stores in the past 15 months. A recent Miami Herald article described his wagers with store managers to improve service and sales. “I bet them on sales and service goals. If I lose, I buy them and their whole team lunch on my next store visit,” explained Lynch. His appointment calendar for lunch is booked into this summer, and he’s on the hook for dozens of lunches for store associates.
It’s a sign that things are, indeed, getting better at Winn-Dixie.