Copyright (c) 2005, 
Dow Jones & Company Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.GREAT BANKRUPTCIES are more than financial events, but social and cultural narratives as well. (Perhaps that's why they are called Chapters, as in 7 and 11.) And the recent Chapter 11 filing of Winn- Dixie supermarkets, the country's fourth largest chain -- at the very same moment that the eponymous film "Because of Winn-Dixie" is at a theater near you -- is a particularly resonant collapse.
The grocery business isn't exactly a glamour game, but on the surface it should be a safe, steady, slow-growth affair. It shouldn't be vulnerable to cheap foreign imports, like the steel business. Or changes in the fashion winds, like retail. Or the victim of tricky financial improvisation, like Enron. At the end of the day, we all need our chicken and our milk and our daily bread.
Yes, we do. But increasingly, our chicken is organic (even Arby's is testing organic chicken), our milk is soy, and our daily bread is artisinal ciabatta. And that's not just a blue state phenomenon. Our national palate sophistication is just that, national. Food courts at the mall are offering panini, airport restaurants are hawking sushi, and portobello is pervasive everywhere.
And, of course, there's Whole Foods Market, which offers not just a startling array of natural products -- many from small, independent producers -- but a level of experiential marketing that is captivating and immersive. And its business is booming.
Winn-Dixie's 900 stores were squeezed between this trend on one hand, and the warehouse stores -- with their low prices and steroidal packaging -- on the other. Add to that the fact that consumers are shopping less often -- ACNielsen reports that we made an average of 92 trips to the grocery store in 1995, and 69 in 2004 -- and the predictable supermarket industry suddenly becomes as treacherous as video-game software.
But these forces aren't national secrets. They've been gathering strength for a while, and if you're in the supermarket business, one would think you'd be vigilant about trends, monitoring consumer behavior with the attention that the Office of Homeland Security pays to chatter from al Qaeda.
That's what makes the inability of Winn-Dixie -- and in many ways, the entire supermarket industry -- to track market changes and adapt to them such a stunning failure. Did they underestimate their customers, thinking that it's only snobby blue-state elitists who wanted balsamic vinegar, and that stores in the South and Southeast were immune from the trends?
I think that's true on one level. But I'd have to say that there are several intersecting explanations for the deep crisis gripping the supermarket category.
Industries are self-selecting in terms of the leadership they attract, and the grocery industry has long been populated by conservative management that is resistant to change and innovation. They took their customers for granted, and relied on manufacturers to innovate with new products, seeing themselves as basically commodity transaction points whose responsibility was to stock the shelves, mist the lettuce, and collect the carts from the parking lot.
This lack of marketing sophistication and a consumer-driven approach screams at us from the entire supermarket buying experience. (What other industry rewards those who spend less, which is what the 10 items or less Express Lane does?)
Food shopping should be a variety of entertainment, which is something that Whole Foods understands. Its merchandising should combine elements of adventure and discovery in a tactile and sensual environment. But consider the clinical drabness of the supermarket, and think how long it's been that way: Step inside your average supermarket, if you wanted to convince yourself that you're in 1964 instead of 2004, you could. Meanwhile, retailers in general -- from Old Navy to even Home Depot -- have defined the shopping experience for stimulation-craved, ADD shoppers.
Another massive failure is that supermarkets don't invest in building their brand -- their marketing is entirely price-driven. They'll whine that they are in a low-margin business and don't have the luxury of marketing dollars, but the truth is that they trained their customers to look for a few pennies off on Bounty and underestimated the demand for quality products.
Is it possible for Winn-Dixie and the rest of the industry to turn this around? I haven't seen any evidence of it yet, and with their current cashier's approach to their brands, it looks like there will be a lot of empty shopping carts in their future.
---
Mr. Hanft is founder and CEO of Hanft Unlimited, a consulting, advertising and publishing consortium.
---
Submissions should be sent to managers.journal@wsj.com
---
Journal Link: To view an archive of past Manager's Journal columns, please go to CareerJournal.com.
My Research
