COLUMBIA, S.C. -- The new Super Bi-Lo here is truly noteworthy.
At 61,000 square feet, it is the largest in the Bi-Lo fleet. It also has a bright, new look and specialty departments designed to attract upscale suburbanites. The unit, which opened here last week, will be the model for other new stores and conversions in similar neighborhoods. Most significantly, the store symbolizes Bi-Lo's renewed commitment to compete for market share. These recent changes come after more than a year of inactivity and under-capitalization that accompanied its split from its former parent, Ahold.
At an opening reception last week, Dean Cohagan told SN the new store shows that Bi-Lo "is finally back in the execution mode." The president and CEO of the newly private Bi-Lo Holdings said the company aims to regain strength in a Southeast market he described as both competitive and filled with opportunity.
"We've been in a holding pattern, so we've got a lot of pent-up energy. We're anxious to get some things accomplished," Cohagan said. "We're feeling really good right now."
In 1977, Bi-Lo was Zaandam, Netherlands-based Ahold's first purchase in the United States. Last year, it was put on the selling block along with Bruno's after an accounting scandal revealed in 2003 left Ahold having to sell assets to reduce debt. The marketing process and Ahold's financial troubles interrupted numerous ongoing initiatives at Bi-Lo, including the integration of Bi-Lo with Bruno's, based in Birmingham, Ala. Since the sale to Dallas-based Lone Star Funds was completed late last year, momentum has returned, Cohagan said. The plans developed while still under Ahold's wing have Lone Star's blessing, as well as its financial support.
"We don't see leaving Ahold as a loss, but as an opportunity," Cohagan emphasized. "Quite frankly, we feel lucky to be partnering with Lone Star. They feel that they not only bought the company, but a management team that's heavily involved in the business and has put together a long-term plan. They're supporting us as well as I ever could have expected."
In fact, said Cohagan, Ahold's sale of Bi-Lo was initiated at the request of Bi-Lo's executive team and himself, not the other way around. Over the last two years, he explained, Bi-Lo and Bruno's found themselves competing with Ahold's other U.S. divisions to win limited capital. The $560 million deal with Lone Star, he added, benefits both parties.
"I want to clarify something: We're not victims," Cohagan stated. "We're part of the team that went forward to Ahold and had the discussions. We felt it would be best for Ahold to sell us because it would raise capital for Ahold to pay down its debt, and get us access to capital and the ability to grow again in the fast-paced Southeast. It was always a positive for us, not a negative.
"Our organization doesn't feel like a victim either," he added. "You might expect to see a lot of turnover in a situation like this, but we held together. That was while we didn't know if we were going to be sold as one chain, or piecemeal, or in an asset play. But we lost almost nobody. It was a great effort in communication, letting everybody know that if they stuck with us, we could be one big chain -- fast and agile. I think everybody feels rewarded by that."
Since the sale, Bi-Lo and Bruno's have completed back-office centralization at Bi-Lo's headquarters in Mauldin, S.C. Earlier this month, the chain announced the closing of 29 stores, mostly Bruno's, that Cohagan described as "underperforming [with] short-term leases." Over the next two years, it will phase out Ahold's private labels and build the Bi-Lo/Bruno's Southern Home brand through the Topco cooperative. Distribution -- and some of Ahold's buying strength -- will be replaced by Keane, N.H.-based C&S Wholesale Grocers. C&S took over Bi-Lo's three warehouses at the time of the sale.
Executives touring the new store in Columbia were unanimous in their admiration of the prototype. Features include an in-store Starbucks coffeeshop, dry cleaner, DVD rental and pharmacy. Food offerings encompass expanded selections of prepared foods, including a sushi bar, an extensive wine section, and large produce and organics departments. The design is bright. It's dominated by light blues and greens, including an arched ceiling over the produce department painted sky blue with clouds. This color scheme replaces the darker maroons and deep blues typical of Bi-Lo's smaller units.
Though Cohagan declined to cite specific locations, he said the Columbia Super Bi-Lo will be viewed as a model for new and replacement stores in appropriate markets. (Bi-Lo also has a 47,000-square-foot prototype it introduced last year in three locations.)
Super Bi-Lo, Cohagan said, communicates Bi-Lo's brand message of "Solutions without Sacrifice." It targets mothers in northeast Columbia, which is booming with upscale housing development.
"We want the customer to walk out of this store and say, 'This chain thinks about moms. They understand my harried schedule, and they know I need solutions,"' Cohagan said.
Cohagan acknowledged that Bi-Lo will encounter lots of competition. Competitors Publix, Piggly Wiggly, Food Lion and Wal-Mart operate food stores within a few miles of the new Super Bi-Lo. Chainwide, Bi-Lo most frequently competes with Wal-Mart Stores, Bentonville, Ark.; Food Lion, Salisbury, N.C.; and Winn-Dixie, Jacksonville, Fla.
"What we have to do as an organization is chase our own goals because if we chase someone else, we'll always be a step behind," he said. "What we're trying to do is to be an effective, long-term supermarket operator in the Southeast and to be No. 1 or 2 in the markets we serve. We have a plan to get there, a good team, and a good vehicle to get there."
