FLEMING FRANCHISEES AWAIT UNCERTAIN FATE

MARK HAMSTRA

DALLAS -- Retailers who operate Fleming-licensed Sentry and Piggly Wiggly stores remained in limbo last week as the company, based here, disclosed that it was negotiating a definitive agreement to sell its supermarket wholesaling assets.

Although C&S Wholesale Grocers, Brattleboro, Vt., is in exclusive negotiations to acquire Fleming's wholesaling business, several industry sources speculated that C&S would look to shed some of those assets, including its franchise rights, to other wholesalers.

One Sentry operator said he had heard that Fresh Brands, Sheboygan, Wis., and Supervalu, Minneapolis, have expressed interest in the Sentry franchise, which includes some 53 stores in Wisconsin. Nash Finch, Minneapolis, has also been mentioned as a possible candidate to acquire the Sentry franchise.

Supervalu said in a prepared statement that it was interested in some of Fleming's assets, but the company declined to comment further. Fresh Brands and Nash Finch could not be reached for comment.

Tim Metcalfe, a Sentry franchisee in Madison, Wis., said he was encouraged by the fact that C&S was a privately owned company with a strong reputation, but he was concerned that the company did not appear to have extensive experience as a retailer.

"If I had my choice, I'd rather be run locally, by someone that understands retailing," he said. "We want someone that's not just looking at this as a wholesaling business. We need to be aligned with retailers."

In the South, where Fleming owns the franchise rights for about 600 stores bearing the Piggly Wiggly name, some operators speculated that local Piggly Wiggly wholesalers, such as Piggly Wiggly Alabama Distributing Co., Bessemer, Ala., might be interested in acquiring the franchise rights, at least in a limited area. Piggly Wiggly Alabama declined to comment.

Several other retailers who purchase groceries from Fleming said they had never even heard of C&S, which has maintained a low profile throughout much of the country despite being the nation's third-largest wholesaler with annual revenues of about $11 billion. One Midwestern retailer referred to C&S as "CNS," while a Western operator called it "S&G."

Burt Flickinger, managing director, Strategic Resource Group/Flickinger Consulting, New York, said C&S has not enjoyed great success in converting former Fleming customers of shuttered warehouses in the Northeast, indicating that the company might encounter the same obstacles in other markets where it plans to acquire Fleming's distribution operations.

"It looks like half of Fleming's customers have cast their lots with other wholesalers, and the odds of getting them back diminish with each passing week," he said.