C&S Preserves Bruno's Banner

JON SPRINGER

BIRMINGHAM, Ala. — Thirty-one stores will be all that remain of Bruno's Supermarkets following the retailer's second round of bankruptcy, but the brand may still live on.

C&S Wholesale Grocers, the winning bidder in an auction of all of the retailer's assets, last week said it would roll 31 of Bruno's remaining 56 stores into its Southern Family Markets retail division, and may use the Bruno's and Food World brand names on existing stores in that franchise. The combination could serve to reunite some Southern Family Markets stores with the brands they gave up when first acquired by C&S from Bruno's in 2005.

For C&S, the $48.5 million purchase preserves wholesale volume from stores that it considers to be “viable as a going concern,” according to Jeff Burkhead, senior vice president and general manager of Southern Family Markets. The remaining 25 stores will be liquidated by Hilco Merchant Services, which partnered in the winning bid along with C&S. Going-out-of-business sales at those stores are expected to begin shortly.

Southern Family Markets was created when C&S acquired Bruno's Birmingham warehouse along with 104 former Bruno's and Bi-Lo stores as those chains passed from Ahold to Lone Star Funds in 2005. Rebranded under the Southern Family Markets name, dozens of those stores have since closed, while 28 others later took on the Piggly Wiggly name. Thirteen grocery stores still operate under the Southern Family banner, Burkhead said, along with 10 liquor stores now known as SFM Liquors.

Burkhead said there was a “strong possibility” the company's existing stores could take on the Bruno's or Food World names.

“Many of the stores we operate began under the Bruno's or Food World names, and had those names as recently as five years ago,” he told SN in an interview last week. “And we would like to consolidate the number of brands that we operate.”

In-stock positions and prices would improve at the acquired stores as soon as they're taken over, Burkhead said. Those changes will bring the acquired stores in line with a recent repositioning of Southern Family and Piggly Wiggly brands, offering stronger ad specials and more competitive pricing on staple items, he said.

“What you'll see at stores operated by Southern Family Markets are great perishables in the perimeter departments, great values in Center Store, and you'll be serviced by the friendliest people in our business,” he said. The repositioning began in reaction to the worsening economy late last year and has been effective at stabilizing sales amid dismal economic conditions in many of the areas the stores operate, he said.

“The market in the Southeast has changed drastically. The competition has increased in the market, and the economic state we all live in today is a bad combination for any retailer in any business,” Burkhead said. “Late in 2008, when the impact of the economy really hit, and there was no doubt that people had become more value-driven, we were able to stop in our tracks, take a deep breath and brainstorm over how we should go to market and what needed to change.

“We looked at the items on the front cover and at the message we gave customers as they came inside the store,” he continued. “We not only had to be more value focused but the product selection needed to be right too. We had to become more competitive on the basic items needed in the household and we had to give the consumer what they wanted.”

Following court approval of the sale of Bruno's last week, an agreement was reached between Bruno's former owner, Lone Star Funds, its former sister chain, Bi-Lo, and Bruno's creditors over liabilities Bruno's owes C&S. C&S was Bruno's largest creditor, and had sought $5.9 million from Bi-Lo, which had guaranteed some of Bruno's obligations under a supply contract with C&S.

As part of the agreement Lone Star said it would pay Bruno's bankruptcy estate $2 million upon completion of the sale and would pay creditors for certain claims against Bruno's estate from C&S. Bi-Lo, which is currently operating under a separate Chapter 11 case, said it settled a $5.9 million claim related to the Bruno's contract with C&S.

31
Bruno's and Food World stores will remain open.
Source: Southern Family Markets