business news in context, analysis with attitude

Just weeks after being sold by Ahold to Lone Star Funds, an investment company, management at Bi-Lo and Bruno’s has announced that it has entered into an agreement with C&S Wholesale Grocers under which C&S will assume ownership of the company’s warehouse facilities at closing and management of our distribution and replenishment activities over the next several months.

In addition, the company is integrating the IT systems of the two chains so that they operate under common systems, and are consolidating corporate functions to one location in Mauldin, SC.

Dean Cohagan, President and CEO of Bi-Lo and Bruno’s said in a prepared statement, “After a careful and comprehensive analysis of our business performance and future prospects, we have developed a plan that is designed to make our company more efficient by reducing costs and more responsive by simplifying the way we do business. The plan is also aimed at focusing our efforts and resources more sharply on what we do best – operating great supermarkets and providing exceptional customer service.

“We have succeeded in finding a new owner that is excited about investing in the fast-growing Southeast marketplace and in keeping Bi-Lo and Bruno’s together as one organization. We will now be an independent regional business – a fast-moving and flexible company that will take quick and decisive action based on the needs of our business, our customers and the unique competitive dynamics of the local and regional markets in which we operate. Our goal is to be the best supermarket in the Southeast.”

C&S will purchase Bi-Lo’s distribution centers in Mauldin, South Carolina, and Chattanooga, Tennessee, as well as a third center in Birmingham, Alabama that primarily services the Bruno’s chain. The centers handle product shipments from hundreds of vendors and then distribute grocery and food products to more than 450 Bi-Lo and Bruno’s supermarkets throughout the Southeast. Preparation for the transition to C&S will begin immediately and proceed over the next several months. The transition is expected to be completed by mid-year 2005. All 1,650 employees who currently work in the three distribution centers will be offered positions with C&S, while about 175 jobs are expected to be affected by the headquarters consolidation.

C&S is a privately owned company with more than $13.5 billion in annual sales. C&S distributes to more than 3,500 stores and warehouse clubs from its 42 distribution centers in Vermont, Massachusetts, Connecticut, New York, New Jersey, Maryland, Ohio, Pennsylvania, California and Hawaii.

In a letter to employees, Cohagan wrote, “We will now be an independent regional business – a fast-moving and flexible company that will take quick and decisive action based on the needs of our business, our customers and the unique competitive situations we face in our local and regional markets.

“Our customers will not notice any changes in their shopping experience. They will see for themselves that we are all still focused on providing exceptional service and the same great value that they have come to expect from us. Our goal is to be the best supermarket in the Southeast.

“But to achieve this goal and to succeed over the long term, it is absolutely imperative that we make some significant changes to our business. Our new plan includes changes that will make us more efficient by reducing costs and more responsive by simplifying the way we do business. In addition, these plans will free up capital for reinvestment in our stores and systems. The plan is also aimed at focusing our efforts and resources more sharply on what we do best – operating great supermarkets and providing exceptional customer service.”
KC's View: