By Randy Tucker
The Cincinnati Enquirer

The owner of 21 local Thriftway supermarkets said Friday that it is leaving the Greater Cincinnati market, after months of speculation that the struggling grocer would jettison its underperforming stores here. The move will affect about 2,000 jobs.

Jacksonville, Fla.-based Winn-Dixie Stores Inc., whose Thriftway chain has fallen from second- to fourth-largest food retailer in the market since 1998, said it would try to sell its local stores in the next 12 months. It will close those stores without buyers.

Nationwide, Winn-Dixie plans to sell or close 111 stores in 16 "non-core" markets - regions where the company is not one of the top three grocers. It also will close 45 unprofitable or poorly located stores in core Southern states.

The moves will cut the company's work force by 10,000, or about 10 percent - including the 2,000 workers locally. Winn-Dixie hopes the number of lost jobs will be smaller if other companies buy some of the 111 stores. Some employees will be offered jobs at the chain's surviving stores.

Friday's announcement didn't surprise some longtime customers."They're leaving for the same reason I like to shop here; there's hardly anybody in the store so I can get in and out without much hassle,'' Mike Kordes, 54, said while he was loading groceries Friday in the parking lot of the Thriftway in Westwood.

"Don't get me wrong; it's a nice store. They have good selection and prices. But this is a Kroger town, and Kroger's just too strong for them.''

Industry watchers have mentioned Kroger, the area's top grocer, and Supervalu's Bigg's chain, the No. 3 food retailer in the market, as possible bidders for local Thriftway stores. No. 2 locally is Meijer, which is an unlikely buyer because it prefers larger store sites.

Neither Kroger nor Bigg's officials would comment on possible negotiations. Winn-Dixie bought Thriftway in 1995 from Richard Lindner, brother of financier Carl Lindner. Richard Lindner had operated the chain for almost 40 years.

Midsize stores

While many Thriftway locations are smaller than the new superstore format favored by Kroger, Thriftway's midsize or newly renovated stores could be appealing to Kroger or new-to-market grocers.

"I can't call the shots for Kroger," CB Richard Ellis retail broker Dave Mengel said. "But if there is a void in their coverage, they'll be after that kind of store."

The industry observers said Kroger and Bigg's would almost certainly take a look at Thriftway stores as a way to shore up market share and defend against Wal-Mart's aggressive expansion plans in Greater Cincinnati. The world's largest retailer and food seller plans to open at least five supercenters in the next several months.

Wal-Mart SuperCenters, which sell hard goods and groceries at prices below average supermarket prices, have eaten into the market share of traditional grocers nationally. Competition from them contributed to a $79.5 million loss for Winn-Dixie in the second quarter.

Mengel said Thriftway has several good locations in Greater Cincinnati, and he thinks competing grocers or other retailers will snap up most sites.

Tough fight ahead

Even with the cuts, Winn-Dixie faces a tough fight because of competitive pressures from Wal-Mart and other competitors.

"Because of Wal-Mart, Costco and Kroger, they can't be the low-price leader - and they have never been perceived as a purveyor of premium products," said Burt Flickinger III, managing partner at Strategic Resource Group, a New York food-industry consultant.

Flickinger noted that Wal-Mart founder Sam Walton learned the grocery business while on the Winn-Dixie board.

Winn-Dixie disclosed its consolidation plans at the same time it reported that third-quarter earnings fell 99 percent to about $600,000, versus earnings of $50.6 million in the same period a year ago.

Winn-Dixie earnings have been hurt in the last three quarters because it lowered prices and boosted promotions to compete with Wal-Mart's supercenters and another southern regional chain, Publix Super Markets Inc.

"The third guy is always the marginal player," said Mark Hugh Sam, an analyst at Morningstar Inc. in Chicago.

"This was a difficult decision, but it is a necessary part of our strategic plan to restore Winn-Dixie to consistent profitability,'' Frank Lazaran, Winn-Dixie president and CEO, said in a news release. "We will make every effort to ensure a smooth and fair transition for affected associates.''

Staff writer Ken Alltucker contributed, along with the Associated Press and Bloomberg News. E-mail rtucker@enquirer.com