Two of the South’s largest grocery store chains, Mauldin, S.C.-based Bi-Lo and Jacksonville, Fla.-based Winn-Dixie, have agreed to merge, a smart move analysts tell PLBuyer.
“I like the idea of keeping both companies as discrete brands (and brand portfolios) initially in order to make the most of the upgrades and refinements that both have made to their store environments and private label portfolios,” says Carol Spieckerman, president of newmarketbuilders, a Bentonville, Ark.-based marketing firm. “Maintaining separation will also allow the combined company to tap into any localized loyalty that the brands enjoy in their markets. Tearing all of that down and attempting to hybridize would be a waste of resources at this point.”
Agrees Paula Rosenblum, managing partner for Miami-based Retail Systems Research (RSR Research), “Given that there is no overlap between the two chains it doesn’t make a lot of sense for them to combine their private label; if anything they might share recipes, but I expect their private labels to remain their own.”
At some point, however, the companies will probably morph into a single private label program, says Jim Wisner, president of Wisner Marketing Group, Libertyville, Ill. “What’s good about that is that as the program itself gets larger and generates more volume, that does a couple of things,” says “One is it increases the efficiency of the PL program and it allows them to get into more items than would otherwise be possible. I think in the long-run, it will have a very positive effect on their private label program.”
Bi-Lo will acquire all of the outstanding shares of Winn-Dixie stock in the merger for $9.50 per share, or about $560 million, the two companies said Monday.
