NationsBank Corp.'s decision to build branches in Winn-Dixie supermarkets in Florida sets up a head-to-head battle with rival Barnett Banks Inc., which is planning to install branches in stores belonging to the Publix chain.

Since Publix and Winn-Dixie are far and away the dominant grocery store chains in the Sunshine State, the move means that the war for supermarket customers will be waged between these two giants, with other competitors like First Union Corp. and SunTrust Banks Inc. watching from the sidelines.

"There will be two very capable teams out there," said Bob Garrison, senior vice president of strategic planning for NationsBank in Florida. "Certainly, Barnett and Publix are a formidable team. We think that NationsBank and Winn-Dixie are equally formidable."

Jacksonville-based Winn-Dixie Stores Inc. operates 433 supermarkets in Florida. NationsBank plans to enter 240 of the largest, best-located ones, Mr. Garrison said.

Charlotte-based NationsBank is paying an undisclosed sum for the rights to install the in-store branches during the next four years. Plans call for 80 branches in the first 12 months. The plan comes five months after Barnett said it planned to build branches in Publix stores.

In terms of sheer numbers, Barnett seems to enjoy an edge. Publix Super Markets Inc., based in Lakeland, Fla., operates 441 stores in the state. Barnett spokesman David Palombi said last Friday that Barnett, which is close to signing a definitive agreement with Publix, expects to open branches in "the vast majority" of Publix stores after completing a pilot project involving a dozen stores in Jacksonville. Mr. Garrison said NationsBank had considered bidding for the Publix in-store rights last year, but decided Winn-Dixie made a better fit.

"We think it's the better option," Mr. Garrison added, citing Winn- Dixie's current program of building new stores and enlarging old ones. Winn-Dixie announced last year that it planned to spend $1.4 billion on a two-year refurbishing effort in its 14-state territory.

"We're in a changeover from a small-store concept to a one-stop shopping concept," said Winn-Dixie spokesman Mickey Clerc.

Mr. Garrison said supermarket branching allows NationsBank to enter new markets at a fraction of the cost of building traditional free-standing branches. He also said the supermarket locations will replace some free- standing branches, but declined to estimate how many of NationsBank's 400 Florida branches would be closed.

"In a case where we have a fairly small free-standing location and there's a Winn-Dixie opportunity that's in close proximity, we'd certainly look long and hard at taking advantage of that," Mr. Garrison said.

With the Winn-Dixie agreement, NationsBank has become a major supermarket banking player virtually overnight. When NationsBank acquired Atlanta-based Bank South Corp. last year, it operated only 11 in-store branches in Texas, with plans to quadruple that number by the end of this year.

The acquisition of Bank South, a pioneer in supermarket banking, gave NationsBank 61 additional in-store branches, making it the dominant in- store player in Atlanta. The second-ranked supermarket player in that market is SunTrust Banks Inc., which recently won the rights to install in- store branches in the 33 Publix stores in Atlanta.

"A combination of things have come together at the right time," Mr. Garrison said. "Some of the early supermarket experiments were nothing more than transaction centers. But we really think now it's possible to go in there with a true sales environment."

The Winn-Dixie agreement represents a major victory for Financial Supermarkets Inc. of Cornelia, Ga., the smallest of the three consulting companies that help banks establish supermarket branches. Financial Supermarkets got involved because it held the exclusive in-store franchise rights for Winn-Dixie.

President and chief executive Alton Wingate said NationsBank is by far the largest of the 130 or so banks that have worked with Financial Supermarkets. "It thrills me that I had the ability to bring NationsBank and Winn-Dixie together," Mr. Wingate said.

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