Roberto Gonzalez has to shout over the sound of screaming saws and banging hammers at his Winn-Dixie grocery store in Sarasota.
Contractors are swarming everywhere, installing high-end fixtures, LED lights and granite counters.
"We had a tarnished image," says Gonzalez, an area manager for the long-struggling grocery chain. "We're working to change it."
By this time next month, the store will have a slew of features tailor-made to appeal to affluent grocery shoppers.
A café with free Wi-Fi, an imported wine and craft beer section, a sushi bar, pizza bar and several stations where chefs prepare hot dinners for shoppers on the go.
Want more gluten-free products, here you go, Gonzalez said. Same with organics and more fresh produce.
Gonzalez acknowledges this is not the Winn-Dixie most people envision in their mind: A chain of dingy grocery stores, pushed by Publix and Walmart into bankruptcy.
Changing that impression means breaking out the checkbook. One of Florida's relatively small grocery chains, Winn-Dixie is spending more than $100 million on renovating stores into "Transformational" models to rival a Whole Foods or Fresh Market in terms of style and polish.
Plus, the company, now out of bankruptcy, is investing in new store technology and giving discount gas deals to frequent shoppers.
Investors say that project represents the best hope Winn-Dixie has for surviving in a hypercompetitive Southeastern market.
It's no idle question, either. Publix, Sweetbay and Walmart are all polishing their stores to more modern, luxurious style, and focusing more on higher-tier foods. Nearly every week, Winn-Dixie ranks as the most expensive store in the Tribune's Market Basket index of 30 common products, and Winn-Dixie stock has lost half its value since August to less than $6 per share.
Like many company overhauls, this new strategy was born from crisis.
While Winn-Dixie had long offered buy-one/get-one free deals, Publix embraced the same strategy and made BOGOs their store's signature offering.
Walmart was snatching up huge swaths of the grocery market in the Southeast with low prices, while Sweetbay was emerging from an overhaul and Target was expanding grocery sections to offer more fresh foods.
Meanwhile, Winn-Dixie was losing market share and remained saddled with hundreds of locations that hadn't been updated in decades. In February 2005, Winn-Dixie filed for bankruptcy, citing $400 million in losses in just three months that year.
The company faced a choice: Either become a low-priced grocery discounter competing with Walmart, or become a higher-tier grocery pavilion based on fresh foods and better service in a lush environment.
Winn-Dixie decided to go upscale.
The first step was fixing a slew of existing stores, and so Winn-Dixie cleaned up about 230 of the company's locations with new equipment, better paint and an overall refresh. That included about 20 in the Tampa Bay area.
Amid that half-step, company officials pondered a bolder idea. What if they built model stores with an even nicer experience for customers? Would customers rethink their perceptions of Winn-Dixie. Would it boost sales?
It was worth finding out.
Winn-Dixie decided to renovate a handful of locations into locations they officially call "Transformational" stores, and targeted spots in Covington, La.; Margate, Fla., and Mobile, Ala. The transformations went well, and Winn-Dixie expanded the project.
At the Sarasota store, for instance, Winn-Dixie is moving the entrance so customers first arrive in a lush produce section that leads into a marketplace with fresh, prepared foods, sushi, craft beers and international cheeses.
A café for lunch and community meetings will have granite counter-tops, HDTV menu boards and comfortable seating.
Several chefs will man carving stations for shoppers to pick out hot meals for home. The seafood area will have an elevated stage where fish mongers will explain what's in the case.
The Sarasota store will expand from 90 to 130 employees, primarily to have more workers around to help customers.
Seventeen stores will go through that transformation this fiscal year, Winn-Dixie officials said.
While some renovations will cost less than $5 million, some will cost nearly $6 million. Of $200 million in capital projects this year, Winn-Dixie is budgeting $125 million for remodels and new store developments.
Along the way, Winn-Dixie hired 100 store managers from outside the company, and made massive investment in technology so every purchase at the register automatically updates inventory software – improving stocks on the shelves and preventing shortages.
Winn-Dixie also made deals to create a Fuelperks card, so customers who spend $50 or more start enjoying an escalating level of discounts on fuel at Shell stations. Originally tested in New Orleans, by the end of October, 80-percent of Winn-Dixie stores will offer the gas discounts.
Are the investments paying off? So far, investors say yes.
Weekly sales at remodeled stores are up about 10 percent, company officials told investors on a recent conference call, paying off the investment in just under four years.
"The hardest thing to change is customer's perception of you," said Meredith Adler, a stock analyst with Barclays Capital who follows Winn-Dixie. "There's a limited amount any company can do. You can improve the physical plant, the quality of the produce, improve the service and have better marketing. But in the end, customer sentiment is somewhat a mysterious thing."
Highlighting the stark reputation issue, some analysts note that Winn-Dixie has dramatically lower value per store.
By market capitalization, each store at Winn-Dixie is worth about $676,000. By contrast, Wall Street values The Fresh Market stores at $17 million apiece, and Whole Foods stores at $36.7 million apiece.
Overall Winn-Dixie sales are down to $6.88 billion in the year ended in June, from $6.98 billion a year before and $7.28 billion the year before.
Adler of Barclay's said she thinks Winn-Dixie is moving in the right direction overall, and she would still make these investments in new stores if she were running Winn-Dixie, though she'd like to keep costs less than $5 million per store. It took 25 years for Winn-Dixie to establish an image, and decisions made before and right after bankruptcy "were not good for their reputation," she said.
Perhaps it's the overall gloomy stock market, but she notes "Winn-Dixie stock has been absolutely crushed."
Meanwhile, Winn-Dixie officials are optimistic enough about the new store type that they're doubling down on the project. They now target at least 60 percent of company stores for the transformational overhaul.
