Bi-Lo Ups Cap-Ex as Sales Rise

GREENVILLE, S.C. — Bi-Lo officials said Wednesday that the retailer would spend $50 million on store renovations in 2011, with an eye on maximizing sales momentum brought about by a comprehensive rebranding. At an event near the company's headquarters here, Bi-Lo said same-store sales increased by 3.7% in 2010, as initiatives around pricing and promotions ranging from health and wellness to fuel discounts

GREENVILLE, S.C.Bi-Lo [4] officials said Wednesday that the retailer would spend $50 million on store renovations in 2011, with an eye on maximizing sales momentum brought about by a comprehensive rebranding.

At an event near the company's headquarters here, Bi-Lo said same-store sales increased by 3.7% in 2010, as initiatives around pricing and promotions ranging from health and wellness to fuel discounts to proprietary fresh offerings took root with consumers and reversed a seven-year slide in sales. The changes are showcased in three newly renovated stores in the Greenville area, with plans for as many as 23 more renovations this year.

Bi-Lo, which emerged from Chapter 11 bankruptcy protection less than a year ago, had a capital budget of around $30 million over the past two years combined. Its plans this year include more emphasis on programs like Fuelperks, which offers shoppers discounts on gasoline; a new website that recently launched; and a shelf-labeling program highlighting healthy product attributes under its Thrive health and wellness program. The shelf tags — highlighting 11 nutrition and lifestyle attributes including “Organic” “Gluten Free” and “Heart Healthy” — will be hitting stores early next month, said Monica Amburn, Bi-Lo's corporate dietitian.

In an interview with SN, Michael Byars, Bi-Lo's chief executive officer, said the chain's new momentum has come from initiatives built around its “Savings Without Sacrifice” brand positioning. This effort involved tapping into Bi-Lo's traditional strengths in promotions and pricing while upgrading service and freshness at its stores.

“We believe we have the best value proposition in the marketplace,” Byars said.

Renovations at stores are focused on “customer-facing” aspects including brighter lighting, new floors and paint, and new branded service departments, Byars said. He acknowledged the chain had a number of stores with decor requiring such an update.

Bi-Lo at the event told vendors to find ways for their products to play a role within the brand and its promotions, and pleaded for ways to make them more profitable for Bi-Lo. The company said its EBITDA margins trail those of its competitors by as many as 2 percentage points, although officials declined to provide precise figures for SN.

“When I joined Bi-Lo in 2005 it was told to me that you've got to get out of the middle. You either had to take it to the lowest price, or gravitate up to the best service position and almost be indifferent to price,” Brian Carney, Bi-Lo's chief financial officer, told SN. “What we're trying to do with Bi-Lo is embrace the middle. We understand you're watching your household budget but we don't think you have to compromise on quality on meat and produce, you receive the customer service you receive and the shopping experience for the sake of value.”

Carney also said Bi-Lo could potentially become an acquirer in the years to come.