If growth is the buzzword of our region's economy, then someone has to feed that growth-literally. And feeding the masses is a big business dominated by Publix in Southwest Florida. But as competing chains try to joust at Publix's windmills, small specialty markets are carving niches. The result for consumers: Everyone from discount mega-stores to organic and gourmet markets is vying for a place in the shopping cart.

While Winn-Dixie and Albertsons once competed with Lakeland-based Publix for market superiority, now Winn-Dixie is closing stores, not opening new ones; and Albertson's has all but abandoned plans for new supermarkets in Florida, company officials say. With an aggressive plan for expansion and a knack for predicting growth areas and getting in early, Publix is now one of the top 10 supermarket chains in the country. The employee-owned chain has 834 supermarkets throughout the Southwest United States-616 of them in Florida. In the third and fourth quarters of 2004, Publix opened 16 more stores, seven of those in Florida. In the first nine months of 2004, Publix's net earnings topped $586.5 million, a 21.4 percent increase from 2003. Even four hurricanes didn't seem to harm the grocer. Frenzied shoppers stocking up on storm supplies offset $63 million in product losses due to power outages. The end result was $183.7 million in third quarter earnings-up 36.5 percent from 2003.

Publix can be spotted near the entrance of virtually every gated community in Southwest Florida, at most major intersections, and in quasi-rural outposts east of Interstate 75, where "coming soon" signs dot the landscape. The stores have built a reputation for being clean, well organized and customer service-oriented. While prices aren't the lowest in town, they are competitive; and Publix further enhances its profile with community visibility-offering flu shots, organizing food drives, donating to Special Olympics, participating in a college savings plan, even launching pre-school enrichment programs. In short, Publix has secured its place as the grocery store for soccer moms, yuppie singletons and golf course retirees.

Winn-Dixie, on the other hand, has been struggling. Founded in 1925, it operates 962 stores in 12 states and the Bahamas. Its first quarter FY 2005 results show a $123.6-million net loss from continuing operations. In November, it was dropped from Standard & Poor's S&P 500 index.

The slide has occurred for several months, which prompted action last spring. The Jacksonville-based chain announced then that it would shutter or sell 156 stores by April under a plan to improve its "competitive positioning," company officials say. Only three Florida locations are on that list, none in Southwest Florida. The grocer will focus on upgrading stores and making over its image as part of a new strategy, says spokeswoman Kathy Lussier.

With Publix popular with so many consumers, who's left for the com-

petition? For mega-retailer Wal-Mart, there are single moms and NASCAR dads. Founded by Sam Walton, the Arkansas-based giant builds its brand identity on down-home roots, rock-bottom prices and all-American sensibilities (though its "made in America" marketing strategy has gone offshore, the way of Nike factories and Microsoft call centers). Still, the retail behemoth has unmatched power to negotiate prices with its suppliers, the result being low prices that are hard to match.

Wal-Mart has long been the target of industry awe and urban planners' scorn, its massive multiservice stores methodically weeding out smaller chains and obliterating anything resembling mom-and-pop. Since 1988, Wal-Mart has increasingly shifted its focus to supercenters. These 100,000- to 220,000-square-foot stores combine typical Wal-Mart fare with full-service groceries and some combination of specialty shops, including vision centers, auto centers, portrait studios, one-hour photo centers, hair salons, banks, employment agencies and more. Lee County has five supercenters, and one just opened in Collier (where a second is planned, as well).

If Publix feels the heat of Wal-Mart's low prices, they're not sweating-at least not publicly.

"We never claim to be the lowest price label. We offer value and service so that customers want to shop at Publix and enjoy the shopping experience," says Maria Rodamis, community affairs manager for Publix Supermarkets.

Rodamis says Publix offers the same products week to week, so customers come to rely on the stores to have what they want all the time-something competitors can't offer.

The company will continue to emphasize service and value, says Rodamis, who's been with Publix since she

started bagging groceries at 14. "That will continue to set us apart in the coming years."

The ads claim that sweetbay supermarket will be a one-of-a-kind shopping experience, with an emphasis on fresh produce and ethnic specialties. Delhaize Group, owner of Kash n' Karry, opened its first Sweetbay in Seminole in November. Three more will debut in Southwest Florida in the coming months, and another eight Kash n' Karry stores will be converted to Sweetbays by the end of the first quarter of 2005. The first, in Bonita Springs, was supposed to open in September, but the hurricanes delayed construction.

Within three years, all existing Kash n' Karry stores will become Sweetbays.

The Sweetbay concept sprang not from reaction to market pressures, but from customer demand, says Jake Allen, a Sweetbay spokesman. "We looked at where the existing markets are now, and asked what was missing," he says.

The answer? A local connection. Sweetbay's target consumer group wants to keep its money in the community. In response, Sweetbay stores will rely on bringing local farm goods directly to their various stores.

"Florida is our backyard," says Allen, "and a hub for agriculture." He adds that Sweetbay also will feature ethnic products, both in the produce and dry goods sections. "Depending on the market, we'll have various ethnic offerings. Many of our markets have a strong Latino influence, so you'll see more of those products on the shelves-more native vegetables in the produce department, items to fill the cooking needs of that heritage."

Sweetbay's look will differentiate the supermarket from Publix, Winn-Dixie and Albertsons. Its produce section resembles a farmer's market, while the seafood section is inspired by Pike's open-air market in Seattle. "From signage to our associates' interactions with customers, to colors to smells to sights, even the music on the intercom, this is a completely different atmosphere from a normal supermarket," Allen says.

Sweetbay's chances of becoming Publix's rival are slim, says Barton Weitz, director of the Center for Retailing Education and Research at University of Florida. "It's unlikely that a small chain can grow to compete with Publix. Smaller chains have had trouble all over the U.S.," he says.

Smaller chains are more vulnerable because they don't always produce quality service or low prices, Weitz says. Publix and Wal-Mart have such great buying power that they can keep shelves stocked all the time, and there's a low cost to get items from the supplier through warehouse to the store. "Smaller retail chains can't take advantage of these higher-technology systems," he says.

Locally owned specialty markets like wynn's, Sunsplash, The Fresh Market and Oakes Farm in Naples, and Blue Pepper in Fort Myers cater to relatively affluent shoppers who prefer familiar faces, a market environment without long lines, and gourmet and organic specialties-sometimes at a higher price.

While some are too specialized for your typical weekly shopping trip (Oakes Farm, for instance, doesn't sell paper or cleaning products), they do offer hard-to-find items. Need gorgonzola-stuffed olives for your next martini party? Think Fresh Market. Organic flax seed oil and spelt bread? Try Sunsplash.

Tim Wynn of Wynn's Market in Naples says the hardest part of being an independent grocer, "besides surviving," is trying to expand-especially with big chains snapping up land on every corner. Small groceries have to find their niche, take care of customers and avoid competing head-to-head.

"We do what they can't do, which is deliver personal service," says Wynn. "Going out of the way, going the extra mile, is something we can do as an independent."

Plus, small grocers can capitalize on the anti-consolidation backlash. "There are still some who like the idea that they can shop in a family-owned store, and not with a big corporation," Wynn says. "People tell us they miss the old way of business, and that's one of the things that helps us; our customers still long for the old corner-store market."

Blue Pepper offers that corner-store appeal with a twist. It's not the sort of place where customers run in for milk, bread and eggs-unless, of course, they're looking for goat's milk, olive loaf and quail eggs.

Blue Pepper has carved its niche through specialization, offering small gourmet lines from Vermont, California and other far-flung areas, as well as Florida and the Caribbean. "People come here for fun, unique, esoteric products, and we work pretty hard to find those," says owner Ron Paytak.

So it all comes back what grocers believe the customers want. "The key to what we do is on the service side," Paytak says. "You can't give personalized service in a 28,000-square-foot store."

Consolidation Question

One expert's idea of how the industry will change.

The narrowing of florida's grocery market to just two major brands-Publix and Wal-Mart-might be inevitable, says Barton Weitz, director of the Center for Retailing Education and Research at University of Florida.

"I think that could happen," he says. "Perhaps another large U.S. retailer could move into Florida-Kroger has stores in Atlanta now-but I don't know whether they'd be motivated to do that, since it's so difficult to compete against Publix."

Every retail category has experienced tremendous consolidation. Wal-Mart and Target are the two big mass retailers; Best Buy and Circuit City are the two big electronic stores; Home Depot and Lowe's are the two big home improvement retailers. The grocery business, Weitz says, is the last big retail industry to consolidate. But now consolidation is happening due, in large part, to centralized information systems that allow chains to manage stores, he says.

"The downside is that it is homogenizing our culture too much," he says.