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2011 North Florida Profile: Focused on Economic Recovery

Jacksonville, Florida
[gn_note color=”#6666ff”]The 2011 North Florida Profile originally ran in the June 2011 edition of The Shelby Report of the Southeast. Due to reader requests we will be posting our Profiles from each edition of The Shelby Report. The profile will be published on theshelbyreport.com one month after it has run in print.[/gn_note]

by Katie B. Davis/staff writer

Nearly a week after Florida’s state legislature on May 6 worked out the final ­details of the state budget, Gov. Rick Scott told The Florida Times-Union that he and his team are just now starting to study the proposal.

From the get-go, Scott—whose campaign for governor was based on creating 700,000 jobs in seven years—said that any item in the 407-page proposal that does not create jobs would be vetoed.

To that end, Scott directed state lawmakers to dismantle Florida’s jobs agencies and create a new Department of Commerce, whose director would work two doors down the hall from the governor, spearheading Florida’s business recruitment efforts.

“When you don’t have one person looking over everything, it makes it more difficult to get things done,” Scott said in January at his first meeting with the state’s economic development arm, Enterprise Florida. “I’ll have a hard time holding somebody accountable for this if I don’t have a person responsible for it.”

Employers might find it increasingly difficult to hire new workers thanks to a May 5 Circuit Court decision, revealed by the State of Florida Agency for Workforce Innovation (AWI), that increased the state’s minimum wage to $7.31 an hour, ­effective June 1, 2011.

According to the AWI website, with this increase Florida will once again exceed the federal minimum wage, and employers operating within the state will be ­required to comply with the higher standard.

Also effective on the same day, those employees who earn tips in Florida, and who otherwise meet eligibility requirements for the tip credit under the federal Fair Labor Standards Act (FLSA), will have to be paid a direct cash wage of at least $4.29 per hour.

House cracks down on prescription drug abuse

With a nearly unanimous vote, the Florida House of Representatives on April 21 ­approved a sweeping bill to combat Florida’s prescription drug abuse epidemic.

“This bill is perhaps, perhaps, even bigger than job creation,” said Rep. John Legg (R-Port Richey) to the St. Petersburg Times. “We will not let a handful of drug dealers bring our people to their knees.”

Among other things, HB 7095, led by Rep. Robert Schenck (R-Spring Hill), ­expands penalties for pill mill operators, requires reporting narcotics prescriptions to a state database in seven days instead of 15, prohibits doctors and some small pharmacies from dispensing narcotics, requires tracking wholesale distributors of narcotics and limits distribution to 5,000 doses per month per pharmacy.

Prescription drug abuse, according to the paper, “has become a nationwide ­problem that has its epicenter in Florida.”

According to the Times, community pharmacy owners say it will hurt their ­businesses and supporters of the prescription drug database don’t like that it ­provides no expanded funding for the program. Others say it will keep people with real chronic pain from getting what they need.

Potential for job growth strong in Florida?

Florida’s new governor has made it clear that he wants to create jobs. Gov. Scott may have gotten a confidence boost when a new Wells Fargo report ­released May 16 predicted a major rebound in the Sunshine State’s battered hiring climate, ­stating that Florida leads the nation in its potential to grow jobs.

Grocery retailers, for one, are on board.

“Growth is by far our greatest opportunity in this market,” said Mike Stout, director of new business development with Save-a-Lot Food Stores, a division of Supervalu.

“Florida is the fourth most populous state in the U.S. and we believe we can open more than 100 locations (in the state) over the next five years. It’s a highly competitive state, especially in the northwest and northeast regions, and our direct competitors like Aldi are aggressively pursuing development,” he told The Shelby Report, “as are other grocery retailers.

“In addition, you see dollar stores such as Dollar General and Family Dollar ­expanding as well. It will be critical that we distinguish ourselves from our com­petitors in the North Florida region.”

Save-A-Lot opened 20 stores in Florida in fiscal 2011 and, according to Stout, has plans for additional ­licensed and corporate stores in Florida for fiscal year 2012.

Florida gets a boost in the job ­potential rankings through its tourism and hospitality industries.

Currently, Florida’s unemployment rate is more than 2 percent above the national average; its population is just over 18.8 million.

Florida was ranked as regionally competitive in 22 industries, one more than ­second-place finisher Georgia, in the Wells Fargo rankings.

The study took two decades of employment data, tracked growth trends and then forecast where they’re likely to be in future years. The report emphasizes the ranking doesn’t equate to job growth, but Florida has the potential to compete in a broader range of industries than the other states.

Winn-Dixie overachieving in slow Florida economy

Jacksonville-based Winn-Dixie Stores reported strong net income improvement for the third quarter ended April 6 vs. the prior-year quarter. Net income was up 12 ­percent to $23.4 million compared to $20.9 million a year earlier.

Identical store sales were down 0.5 percent in the quarter vs. last year, attributed to 1.7 percent decline in transactions during the period, but Winn-Dixie chairman, president and CEO Peter Lynch said the company has reversed that trend in its fourth quarter.

“Like our peers, we’ve seen higher inflationary costs,” Lynch said during

the ­company’s earnings call May 17. “During the quarter, we did a very good job of passing through the cost increases, and keeping that balance is going to be ­critical.”

Net sales were $1.6 billion in the third quarter, flat vs. the same period last year.

Lynch said he felt it was a good quarter overall, and he’s starting to see signs of improvement in the economy.

“It’s not going to become a robust economy, but things are moving in the right direction,” Lynch said. “The economic ­recovery in Florida still lags behind the national average, and our unemployment numbers are still ahead of the national average, but we’re seeing improvement.

“Tourism in the region is looking up, and even though we just started to cycle the oil spill a few weeks ago, once we get into June, July and August, we’ll see a tremendous upside in tourism. I think (tourism) increased 5 percent vs. last year. We’re also seeing manufacturing exports up 14.5 percent over a year ago, and personal income is up about 3.4 percent from last year. We’re starting to see good signs and I’m encouraged.”

During the earnings call, Lynch spoke about how while visiting several Winn-Dixie locations across the South he’d been praised for the company’s fuelperks!® Rewards program.

“I think our launch of that program was perfect,” Lynch said of the almost-two-year-old program used in 44 percent of Winn-Dixie’s stores, including those in New Orleans, North Florida and South Georgia. “Obviously it’s still a challenging market and consumers are wary, especially with growing gas costs, but we think we’re helping the consumer with fuelperks!, and clearly they think that, too.”

Lynch went on to say that he is more optimistic about the coming fiscal year than he was about fiscal year 2010.

“Overall, we are pleased with our third quarter results,” Lynch said during the call. “We strategically managed our promotional activity and merchandising efforts in this inflationary environment to drive improvements in both adjusted EBITDA and gross margin while still offering good value to our guests. Based on year-to-date performance and positive fourth quarter-to-date identical store sales, we remain on track to achieve our financial guidance for the fiscal year.”

One of the things keeping Winn-Dixie on track for financial success and growth is the company’s remodeling efforts, along with a new store format Lynch spoke about in April.

Speaking at the Barclays Capital Restaurants & Retail Conference on April 26, Lynch said that the company is pursuing what’s been deemed “transformational” remodels at three different formats: full-sized stores, midsized stores and base (smaller) stores.

Winn-Dixie, in fact, is generating annual sales of $500 per s.f. at new stores and recent remodels, Lynch added.

The grocer has been in the process of remodeling its store base for more than two years, and the first Jacksonville-area ­remodel store on State Road 210 is scheduled to be completed in July.

Lynch said another 15 transformational remodels will start by the end of the calendar year and that two-thirds of the chain’s stores could eventually have the transformational remodel.

The new store concept provides a modern “farmer’s market” format in an “efficient, well-designed 55,000-s.f. layout,” said the CEO.

According to his presentation, the design includes wooden/stained concrete floors, exposed beams and glass, an emphasis on fresh produce and other perishables from local growers, an expanded deli with olive and bruschetta bars, a whole bean coffee station, a ­floral department and a well-stocked wine department with a steward.

“Entering into the produce department makes the consumer feel good, and that makes for a great customer experience,” Lynch said during the conference.

The perishables area also includes deli sections that emphasize meal solutions, he continued. “The deli experience is extremely important, and you’ve got to find a better way to have meal solutions for the ­consumers, with someone with credibility behind that deli counter.”

New store features include wood-burning rotisseries, wing bars, specialty desserts and a candy shop along with expanded Hispanic and Kosher offerings and seasonal merchandise and ­specialty gift sections.

Lynch said he knew Winn-Dixie was on the right track with its transformational approach when a customer referred to one of the chain’s stores as “that new ‘Winn-Dixie Whole Foods.’ That’s when I knew we had a winner.

“So we’ve clearly transformed the company and transformed the brand, and that’s what we’ve been trying to do—that’s what this whole journey has been about, and we’ve gotten there.”

The primary “transformational” model is in new stores, including units in Covington, La., Margate, Fla., and Mobile, Ala., that Winn-Dixie has opened over the past two years, Lynch said.

The company plans to use the same formula at new stores in Apopka, Fla., near Orlando, and in Jacksonville, which are scheduled to open around July 1.

According to Lynch, Winn-Dixie Stores’ vision is to “be a successful and admired retailer that celebrates each community by creating a personal, fresh and fun experience.”

If recent accomplishments are any indication, that vision is being carried out.

Winn-Dixie’s in-store pharmacy was recognized by J.D. Power and Associates in February as the J.D. Power 2011 Customer Service Champion. The stores ­customer satisfaction rating increased 2.7 percent vs. 2010—surpassing industry average—according to February’s American Customer Satisfaction Index. The Jacksonville Business Journal noted in its February edition that “In 2010, Winn-Dixie customers were the most satisfied they had been in four years.”

And, more recently, on the heels of the April 27 tornados that ripped through Alabama and Georgia, Winn-Dixie launched “Neighbors Helping Neighbors.”

Funds from the “Neighbors Helping Neighbors” program aid the American Red Cross in providing food, shelter, counseling and other assistance to the communities affected by the storms that caused major damage across the South this week.

Guests in any of Winn-Dixie Stores’ 484 locations throughout its operating area can help their neighbors affected by the tornadoes and severe storms by simply donating through the “Neighbors Helping Neighbors” program.

“Winn-Dixie is a part of these communities,” said Mary Kellmanson, Winn-Dixie group VP of marketing, in a press release. “It’s only natural for us to put the weight of our organization against this tragedy. It’s simply what good neighbors do.”

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