SEESSEL'S EXPANDS SCHNUCKS' REACH

MARK HAMSTRA

ST. LOUIS -- Schnuck Markets here will establish a foothold in a second major market with the pending acquisition of Seessel's, a 12-unit chain in Memphis, Tenn.

Schnucks, which is acquiring the Seessel's stores from Albertson's, Boise, Idaho, also is exploring the possibility of opening additional stores in the Memphis market, including some of the four Seessel's stores that Albertson's recently shuttered. The purchase will give Schnucks a 102-unit chain stretching as far to the south as it reaches to the north with its Logli Supermarket brand in northern Illinois.

Purchasing terms of the Seessel's acquisition, which is expected to close by June 3, were not disclosed.

Schnucks has long had its eye on Seessel's. Twice before -- in 1992 and 1996 -- Schnucks was thwarted by higher bidders in its attempts to buy the grocery chain. This time, it was Schnucks that offered the high bid when it bested the offer of Art Seessel, the great-great-grandson of the chain's founder, who first sold the chain in 1987 before repurchasing it and then selling it again in 1996. Seessel had offered to buy only eight of the 12 stores, according to Craig Schnuck, chairman and chief executive, Schnucks.

Schnuck said he thinks the Seessel's stores will fit in well with his company's core brand.

"Historically, the stores had been positioned with the same type of market positioning as we had, and they have the same type of stores that we have, so it's a very natural fit for us," he said.

He said Schnucks plans to supply the Seessel's stores from its St. Louis warehouse. Memphis is a five-hour drive from St. Louis and a two-and-a-half-hour drive from Schnucks' current southernmost site in Cape Girardeau, Mo.

As of last week, the company had not yet decided whether to retain the Seessel's name. The stores will close briefly before reopening under Schnucks' ownership.

The company tapped veterans from its own ranks to lead its operations in Memphis. Karen Tolan was named divisional manager in charge of operations for the stores, and Jerry Beck was named director of marketing and merchandising. Additional personnel were expected to transfer from St. Louis to support the Seessel's division. Schnucks expected to retain all 1,200 Seessel's store employees.

Albertson's said it closed its regional office in Memphis last month, which had overseen stores in Nashville, Tenn., and Springfield, Mo. Albertson's has now withdrawn from all three markets as part of its plan to shutter 165 underperforming stores and exit unprofitable markets.

Patrick Schumann, consumer analyst, Edward Jones, St. Louis, said Albertson's probably found the relatively small base of stores in the Memphis area difficult to manage with most of its stores in the West or in areas of higher concentration.

He said the acquisition gives Schnucks a chance to leverage the strengths that have made it a powerhouse in St. Louis.

"They can add some of their expertise into the Seessel's chain," he said. "Plus they can add some economies of scale."

Schnuck said the Seessel's stores, which range in size from 26,000 to 68,000 square feet, would be enhanced with more perishables, baked goods from Schnucks' Nancy Anne Bakery in St. Louis, and a wider array of prepared foods.

"We're definitely going to be supplying the Memphis stores with everything that we make or ship out of St. Louis, and that would include products from our bakery plant," he said. "We have a floral design center, and we also have a central kitchen, and all of those will be supplying products."

Lori Willis, spokeswoman, Schnucks, also said the nine Seessel's stores that had pharmacies would retain them, and any additional stores that are built in the market would have pharmacies as well. Schnucks operates 81 in-store pharmacies.

She said Schnucks had no plans to introduce video rental, which is offered in 67 Schnucks' outlets, into Seessel's.

Six of the Seessel's stores offer gasoline, a new venture for Schnucks.