Bi-Lo turns 50: Officials say grocery has emerged as a healthy contender in market

Bi-Lo turns 50: Officials say grocery has emerged as a healthy contender in market

September 22nd, 2011 by Ellis Smith in Business Around the Region

In this file photo, Bronwyn Powell, left, co-manager of service at Bi-Lo in Red Bank, talks with customer Anne Rogers near the produce department.

Photo by Tim Barber/Times Free Press.

Bi-Lo today will celebrate 50 years in business with gasoline, grocery and gear giveaways as part of a four-state throwback tour through the Southeast.

"We feel like not only are they going to save on groceries, but we want to help them at the gas pumps as well," said Bi-Lo district manager Rodney Dillard, who will give away a total of 20 free tanks of gas to customers in Chattanooga this week, as well as $5,000 worth of groceries.

Corporate officials will visit Chattanooga-area locations in a vintage Airstream trailer to remind customers that Bi-Lo's community roots run deep, said Michael Byars, Bi-Lo president and CEO.

"We wanted our Blast from the Past tour to be something that everyone in our market could participate in, and we hope that our customers take advantage of the festivities and great prizes we have planned for each tour stop along the way," Byars said.

History lesson

IF YOU GO

At each location:

* Organizers are giving away full tanks of gas to 10 customers

* Another 10 winners will receive $250 worth of groceries

* Customers may receive one of 25 reusable shopping bags filled with groceries

* 100 customers could win a free Bi-Lo T-Shirt

* Some store items are being rolled back to 1961 prices

WHERE?

* St. Elmo store on Thursday, Sept. 22 from noon to 2 p.m.

* Red bank Store on Friday, Sept. 23 from noon to 2 p.m.

Other locations:

* Blairsville Ga., on Monday, Sept. 26

* Ooltewah-Ringgold Road on Wednesday, Oct 19

Source: Bi-Lo

The grocer's history in Chattanooga dates back to 1908, when Red Food was founded by Frank McDonald. As McDonald built out his empire, Bi-Lo was founded by former Winn-Dixie executive Frank Outlaw in 1961.

Bi-Lo began to grow, but it was quickly snapped up by the Dutch food distribution conglomerate Royal Ahold in 1977, a worldwide food company that still owns brands around the world

The Red Food Stores chain also was bought by the Dutch conglomerate, and the stores were rebranded under the Bi-Lo name a year later.

One sale, one bankruptcy and several restructurings later, officials say that Bi-Lo has emerged as a healthy contender in the grocery store world, and a fierce rival of retailers like Wal-Mart that have added grocery options to lure customers away.

But Bi-Lo also upped the ante, adding more nonfood options and upgrading four area stores to Super Bi-Lo layouts to better compete with both grocery and other retail competitors.

"It used to be just like meat, potatoes and bread, and now it's like a one-stop shop," said Red Bank Bi-Lo store manager Trina Cannon in the middle of one such 2006 upgrade.

Though Bi-Lo's Blast from the Past tour is accentuating the positive parts of the chain's expansion from humble roots to 207 stores in four states, it hasn't all been easy.

The company spent years on the auction block after its parent company Ahold overstated earnings by about $880 million and got into debt, news archives show.

Later, an aborted merger with rival Food Lion went south and Bi-Lo closed stores and shed some of its employees.

Looking forward

ABOUT BI-LO

* Founded in 1961

* 207 stores

* More than 15,000 workers nationwide

* 31 stores in Chattanooga area, including four Super Bi-Lo stores

* About 2,320 workers in Chattanooga

Source: Bi-Lo, news archives

But that's ancient history, said Rondel Cuyler, director of advertising for Bi-Lo. Through brand positioning, cost control and high-end perks, the grocer has remained a viable competitor in South Carolina, North Carolina, Georgia and Tennessee.

Though Cuyler won't divulge strategy or earnings details for the private company, she claims that "attendance continues to grow at all stores," at a "slow and steady rate of growth, as planned."

"Our platform is always to be a hometown grocer," she said.

Dillard chalks Bi-Lo's success up to "savings without sacrifice," as well as professionalism and clean stores.

"That's real vital, because when you have a fleet of stores you're always going to have some older stores and some newer stores," he said. "But we try to keep it consistent regardless of what part of town you're in."

Officials are mum on future plans, but the Bonuscard and exclusive Fuelperks programs will continue to be a big part of Bi-Lo's current marketing push. The company also touts certified angus beef, longer product sales than competitors, and a large percentage of tenured employees, officials said.

"We have Fuelperks exclusivity in many of our markets," said Cuyler, who noted that customers have saved more than $6.06 billion through the Bonuscard and Fuelperks rewards. "Those are the things that make us different, that set us apart."

TIMELINE IN CHATTANOOGA

1908 - Red Food founded by Frank McDonald in Chattanooga

1961 - Bi-Lo founded by Frank Outlaw, former Winn-Dixie executive in Mauldin, S.C.

1977 - Dutch conglomerate Royal Ahold AV buys Bi-Lo

1979 - Red Food grows to 23 stores in Tennessee, but is purchased by a French distribution firm one year later

1989 - Red Food's deal to buy seven Chattanooga-area Kroger stores halted by Federal Trade Commission

1994 - Ahold buys about 55 Red Food Stores for $129 million

1995 - Red Food Stores transformed into Bi-Lo stores

1997 - Bi-Lo introduces its Bonuscard, designed to reward frequent shoppers with savings

2003 - Ahold suffers $1.2 billion accounting scandal, goes into debt

2005 - Lone Star Funds agrees to buy Bi-Lo for $660 million from Royal Ahold RV

2005 - Bi-Lo takes over two Chattanooga-area Winn-Dixie stores as Winn-Dixie divests a third of its stores to escape bankruptcy

2005 - Bi-Lo grocer begins outsourcing distribution operations

2006 - Bi-Lo begins diversifying into ethnic food and consumer products; builds new Red bank store

2007 - Lone Star spins off off Alabama-based Bruno's foods; puts Bi-Lo up for sale amid closures in Athens, Lookout Valley, Cleveland and Summerville, Ga.

2008 - $9 million Super Bi-Lo chain introduced in Ooltewah, Hixson, East Brainerd and Red Bank

2008 - The chain achieves 35 percent market share in Chattanooga, but financial troubles persist

2009 - Food Lion's $425 million acquisition of Bi-Lo from Lone Star Funds falters; Bi-Lo seeks bankruptcy protection for more than $260 million in debt

2010 - Bi-Lo emerges from Chapter 11 bankruptcy owning 30 Chattanooga-area stores, with Lone Star remaining majority owner after investors pump $500 million into the company.

2011 - The grocer celebrates its 50th anniversary with large-scale gasonline giveaways

Source: Bi-Lo, news archives