FDBuyer: Bi-Lo is 50!

Discussion
Jun 29, 2011
Warren Thayer

Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Dairy Buyer magazine.

One competitor of Bi-Lo complains that he is not at all happy with the Greenville, S.C.- based chain’s aggressive “fuelperks!” program, which offers discounts for gasoline based on store purchases.

“I suppose if you wipe your debt away (Bi-Lo emerged from Chapter 11 protection a year ago), you can afford to do things like that,” he said. “They’ve got a good loyalty card program, and they’re advertising on the radio constantly. It’s definitely helped their business.”

So, now that the chain has reached the ripe old age of 50, how’s it doing?

“It’s holding its own,” is what I heard most often from vendors, competitors and market observers.

Given all that Bi-Lo has been through in recent years, that’s pretty darn good. Annual sales from the chain’s 207 stores in South Carolina, North Carolina, Tennessee and Georgia reportedly run in the range of $2.2 to $2.3 billion. Some estimates run higher than that. For its part, Bi-Lo isn’t saying much.

At a vendor conference in February, Bi-Lo said same-store sales rose 3.7 percent last year. reversing a seven-year decline. It credited pricing and promotion initiatives, including the fuelperks! program which, by the way, customers appear to love. Bi-Lo also announced plans to spend $50 million in store renovations this year, including three newly renovated stores in Greenville and 23 other store renovations either on the drawing boards or already underway.

Brian Carney, Bi-Lo’s CFO, was quoted as saying at the time that when he joined Bi-Lo in 2005, he was told that the chain had to “get out of the middle” between low-price and high-service. But he said that Bi-Lo is now trying to “embrace the middle,” offering low prices while also offering high quality and customer service. Some observers see this as risky over the long haul.

Indeed, according to last August’s Consumer Intentions and Actions Survey (CIA, put out by BIGresearch), price, location and selection came out as the top three reasons Bi-Lo shoppers say they shop there. But the chain still fared poorly against Walmart, Publix or Aldi in various key attributes.

Bi-Lo scored a tad below the national average for supermarkets (but above Walmart) in terms of its Net Promoter Score, a measure of store loyalty that was also part of the BIGresearch study.

Bi-Lo had a lower percentage of both Detractors and Promoters than the national average of those surveyed. But it had a higher than average percentage of Passives — shoppers who didn’t feel really passionate about the stores. To me, this suggests that Bi-Lo hasn’t staked out a strong position in the market, as Walmart and Aldi have for price and Publix has for service.

All in all, the chain is clearly “holding its own,” as observers say. These are strong and intelligent initiatives, but my own take is that Bi-Lo needs to stand for something that easily and readily resonates with shoppers — price or quality/service.

Discussion Question: Is an “embrace the middle” strategy for Bi-Lo or other regional grocers practical?

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6 Comments on "FDBuyer: Bi-Lo is 50!"


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Gene Hoffman
Guest
Gene Hoffman
9 years 10 months ago

Anything is practical that works in meeting and sustaining one’s business objectives. So much depends on who else is in the competitive mix as well as what other options – if any – a retailer has. Instead of trying to push the past into the future as a corporate strategy, I would much prefer to innovate some new contemporary value for my business model so I stand for something that resonates with active shoppers in my operating area.

Concluding thought: What’s past is prologue!

Ian Percy
Guest
9 years 10 months ago

The most insightful comment in this piece is that “Bi-Lo needs to stand for something” Heck, we ALL need to stand for something. Has that ever been more clear than in this perpetual political cycle. Sure is true in retail!

As ancient scriptures say: ‘Be hot, be cold, but don’t be luke-warm’. Being in neutral will get you nowhere., not in retail and not in life.

William White
Guest
William White
9 years 10 months ago

I think so, as long as they maintain strong, high quality perimeter departments. They know they can’t compete against Walmart on price, but can achieve a customer perception that their center store prices are a value. The strong perimeter departments and great customer service will keep bringing customers in to shop the entire store, but they won’t com back unless they perceive a value in center store as well.

Bill Hanifin
Guest
9 years 10 months ago

Aiming for the middle is a poor strategy unless you are in an archery contest!

Competing principally on low price is risky unless you can insulate your business from those that will always be able to do it a tab better, i.e. Walmart.

Stellar service shouldn’t have a great impact on prices. With a commitment to training, associates should be able to deliver a more quality in-store experience without driving up costs.

With the apparent success of the fuelperks! program, it would make more sense to strive for higher quality delivery to continue to build brand value.

Craig Sundstrom
Guest
9 years 10 months ago

I must say I’m disappointed: to me it’s just not a grocery discussion without David’s piquant remarks; nevertheless, we’ll press on…one thing I noticed was the low response–across the board–for “trustworthy retailer.” (It’s important to note this isn’t the percentage saying their retailer is trustworthy, only the percentage saying that’s a major reason for their choice, but I still find it remarkable.) Also, we must amend the maxim: it isn’t “location, location, location.” It’s “price, price, price”…almost regardless of who you are, it seems. As for Bi-Lo: never heard of ’em, but I wish them well in their next 50 years.

Odonna Mathews
Guest
Odonna Mathews
9 years 10 months ago

The verdict on Bi-Lo isn’t out yet. If you embrace the middle, you still need a differentiator. Sounds like the fuelperks program is providing that.

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