UNIFIED RUNS BANKRUPT MEMBER'S THREE STORES

LOS ANGELES -- Unified Western Grocers here said last week it is operating three northern California stores on a temporary basis after acquiring them from a member that liquidated its assets.The stores, formerly called Bianchini's Apple Markets, are part of the Apple Markets banner the member-owned cooperative licenses to 18 other California stores.Since acquiring the stores in June, Unified has renamed

LOS ANGELES -- Unified Western Grocers here said last week it is operating three northern California stores on a temporary basis after acquiring them from a member that liquidated its assets.

The stores, formerly called Bianchini's Apple Markets, are part of the Apple Markets banner the member-owned cooperative licenses to 18 other California stores.

Since acquiring the stores in June, Unified has renamed them Apple Markets, replenished the shelves and performed minor repairs, but hopes to find a buyer for the stores in the next few months, Dan Murphy, senior vice president, retail support services, told SN.

"Our intention is to operate them as corporate stores to get the conditions back up so we can keep consumers coming in and then to offer them for sale to our members through a bidding process," Murphy explained.

"If we can't find a buyer among our membership, we will open the bidding up to all our retail customers. And if we still can't sell them, then we will operate them indefinitely as corporate stores."

Unified operates 11 corporate stores in California under the SaveMax name and two in Oregon under the Thriftway banner.

The three northern California stores were formerly operated by Michael Bianchini, a former Unified employee who became a retailer when he acquired two locations in Moraga and Novato from Petrini's Markets in 1996 and one from Albertson's in Petaluma in late 1999.

According to Murphy, Bianchini filed for protection under Chapter 11 of the U.S. Bankruptcy Code in late May, but when his reorganization plan was rejected twice by a bankruptcy judge, he was forced to liquidate under a Chapter 7 filing.

Unified was Bianchini's largest creditor, with a $4.2 million obligation, Murphy said. Unified paid $3.5 million in June to acquire the stores to keep their volume within the cooperative, he added.

The stores average 20,000 to 25,000 square feet. Although Murphy declined to pinpoint their volume, he said sales never really deteriorated -- in part because of Unified's efforts to keep the shelves looking full and in part because of a Teamster strike last fall against a distribution center that supplied Safeway. "A lot of customers switched to Bianchini's at that time, and that helped us gain as many customers as we lost," he said.

Murphy said Unified has appointed a new general manager for the stores -- Lyle Brady, who joined the cooperative in February after working for a retail chain in northern California -- and he in turn placed new managers at each store early last month.

Since then Unified has begun replenishing the stores "with the varieties customers deserve," Murphy said, "and our next objective is to improve store conditions, including replacing light bulbs where needed, repairing cases, replacing wall tiles, repolishing the floors -- fixing things that are noticeable to customers, so we can improve the shopping environment."

Although Unified is not promoting the upgrades in its ads, "we have started to run more aggressive price ads in the last week or so," Murphy said.

Unified played a large part in keeping the stores operating while Bianchini's financial situation was deteriorating earlier this year, Murphy noted. "We placed five or six Unified people at each store beginning in February to keep an eye on our assets and to maintain the store conditions as best they could," he recalled.

"We knew we'd probably wind up with those stores, and we wanted to know the ins and outs of the organization and also to make sure the shelves looked full to consumers."