Reuters: BI-LO Goes on the Block

Discussion
Aug 11, 2010

By George Anderson

The BI-LO supermarket chain, owned by Lone Star Funds, is
up for sale and drawing interest from private equity firms and other grocers,
according to a Reuters report.

Among the bidders are Kroger and Publix, “a
source familiar with the matter” told
the news service.

While Kroger had no comment, Publix spokesperson Maria Brous
called the story a “rumor.”

“We have not to my knowledge put a bid in for any BI-LO locations or
expressed any interest in any of their locations,” Ms. Brous told The
Packer
yesterday.

BI-LO, which operates 207 supermarkets in the Carolinas,
Georgia and Tennessee is the number one or two conventional grocer in roughly
75 percent of the markets where it has stores, according to a Reuters report
in April.

The chain emerged from Chapter 11 in May. It had filed for bankruptcy
protection in March 2009, citing a weak economy and competitive pressures as
the reasons behind its action.

Discussion Questions: What do you think is likely to happen to BI-LO, assuming Reuters is
correct in reporting the chain is for sale? Do you think the chain has the
wherewithal to compete effectively if it is not sold?

Please practice The RetailWire Golden Rule when submitting your comments.

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8 Comments on "Reuters: BI-LO Goes on the Block"


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David Livingston
Guest
10 years 9 months ago

Obviously BI-LO does not have the wherewithal to compete and has been hopelessly beaten. Otherwise they would have not filed for bankruptcy. Kroger, Publix, Harris Teeter, and Food Lion all have opportunties to take many of the locations while consolidating some of their own. It might make sense for Food Lion to close two smaller underperforming stores and relocate into a nearby BI-LO.

I’m skeptical of those market share figures. It says BI-LO is #1 or #2 in 75% of their markets. Wonderful; means that in 25% of the markets they are nowhere near contention. In the other 75%, they are probably a distant second, perhaps being number one someplace. When I was in school I made As and Bs in 75% of my classes. I got one A and flunked 25% of the time. Seriously though, you can see how they use numbers to distort their situation. Every bankrupt grocer will quote this kind of stat to up-sell their company.

Ryan Mathews
Guest
10 years 9 months ago

If it isn’t sold, it will need to be scaled back.

Gene Hoffman
Guest
Gene Hoffman
10 years 9 months ago

David’s analysis beat me to the punch. Some stronger chain will buy BI-LO and absorb their “keepable” stores. Then BI-LO, like many others in the past, will become a part of the passing parade.

Anne Howe
Guest
10 years 9 months ago

The rumored sale of BI-LO stores speaks to the reality of shopper behavior: shoppers vote with their dollars. Despite the trend to visit more stores in search of good deals and price promotions, shoppers will not continue to visit stores where the experience doesn’t meet their expectations. My semi-regular visits to the southeast typically include a few visits to BI-LO, and while my eye is better trained, it’s easy to see the lack of investment in quality merchandise and interesting products that might inspire a return visit.

Not surprising to see interest in some of the quality locations by other grocers. I would also hope to see some of the local specialty retailers such as The Fresh Market move into the bidding as well.

Roy White
Guest
Roy White
10 years 9 months ago

More a commentary than a response, but the disappearance of BI-LO following hard on the heels of the end of Ukrop’s independent existence, is another step towards industry consolidation, reduced diversity, fewer consumer choices, and fewer potential sources of innovation.

Anne Bieler
Guest
Anne Bieler
10 years 9 months ago

It would be extremely difficult for BI-LO to rise again. As the southeast grew rapidly with companies relocating to the area, new housing and population growth, Kroger and Publix moved in, too. The space is very crowded with these big regional players as well as the the existing grocery chains–Food Lion, Ingles, Walmart and others. A few locations may become Food Lion or similar, but there is a lot of retailer choice in many areas.

Ed Rosenbaum
Guest
10 years 9 months ago

If BI-LO is for sale, does it have significant value other than location for the potential buyers? I have some concern also about the validity of the survey numbers.

Craig Sundstrom
Guest
10 years 9 months ago

I guess it’s like saying the Nationals are always in the top 5 teams in their division: David’s delightfully acerbic remark(s) pretty much sums everything up…if there’s interest, it’s probably in the real estate.

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