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2009-02-19
Birmingham, AL. Regional Grocery Chain Crushed By Wal-Mart

Mayor Mark Harris of Weirton, West Virginia is thrilled that his small community is finally getting a Wal-Mart supercenter. He doesn't seem to mind that the "old" Wal-Mart discount store in Weirton will soon stand empty, he's just looking to good economic times ahead. "We'll bring more traffic in the area with certain retailers which will then start spending more money throughout the city of Weirton, so it actually helps everybody out," said Harris. This narrow economic understanding of Wal-Mart's impact is typical of local officials, who often mistake a supercenter for new economic growth. But if Mayor Harris would just drive down to Birmingham, Alabama, he might not believe that Wal-Mart "actually helps everybody." He should pay a call to Bruno's Supermarkets, a Birmingham-based grocery chain, whose motto is "Where Home Begins." Bruno's Supermarkets, LLC, is the parent company of Bruno's and Food World grocery stores, which includes 23 Bruno's locations in Alabama and the Florida Panhandle. Founded in 1933, Bruno's has undergone several changes in ownership starting in 1995 until 2007. "The focus is now on returning this hometown favorite to its roots as an Alabama-based company," the company says, "and providing the same hospitality that is the hallmark of the South. Bruno's shoppers can expect a return to the services, qualities and community commitment that once made Bruno's the most desirable shopping destination, as well as new and inspired ideas to enhance their busy lifestyles." But the company notes that "a new executive team was installed in fall 2007, and the company hasn't looked back since." Unfortunately, Bruno's is looking back over its shoulder this week, as the grocer is facing bankruptcy again. Bruno's admitted on February 18th that it has slashed 30 jobs at its headquarters, and shut down 10 'unprofitable' stores, including 4 in the Birmingham area alone. Bruno's employs 4,200 people, and every single employee is nervous this week, upon learning that Bruno's has filed for Chapter 11 bankruptcy protection this month. The grocer told the News that its four Bruno's and six Food World stores are money losers and that creditors will be better off if they are closed. Bruno's is now seeking permission from U.S. Bankruptcy Court in Birmingham to close the 10 stores. The court is now considering the request. Bruno's is hoping to have the stores closed and the contents sold by the end of March. "It is never an easy decision to close stores or reduce positions," said a "chief restructuring officer" at Bruno's, "but we believe this is a necessary step that will enable Bruno's to be a more focused and competitive business across the region we serve. We owe this to our customers and others who depend on us to operate efficiently, effectively and profitably." It was left to the Birmingham News to make the obvious link. According to the News, the four Birmingham-area locations are each within 10 miles of a new or recently remodeled Wal-Mart Supercenter. The News quoted the Shelby Report, a grocery trade journal, as revealing that Wal-Mart "has clawed its way to the top spot" in the Birmingham grocery market share over the past decade. Wal-Mart now has a remarkable 50% share of the Birmingham metro grocery market, which means half of all groceries sold in Birmingham are sold by Wal-Mart. To make the point even sharper, Bruno's share has been cut in half in just the past 4 years, from a 22% share, to 11%. When Bruno's filed for bankruptcy, it mentioned the heavy competition in the area, and limited access to loans. The company said it had debts of $500 million. At this point, the company could be sold in whole or in part, or just emerge as a smaller company. One thing is clear, the workers at Bruno's stores in Birmingham, Auburn, Montgomery, Wetumpka, Fairhope, Montgomery and Millbrook, will now have to apply for work at Wal-Mart if they want to sell groceries.

What you can do: Bruno's has been around for 76 years. It took another southern chain to drive it under: Wal-Mart. This is not the first tough spot for Bruno's, which has been through one bankruptcy already. But at one point in the 1980s, Bruno's was Alabama's largest supermarket chain. The company is now owned by a Texas hedge fund called Lone Star Funds. If Mayor Harris in West Virginia, or any other Mayor in America sincerely believes that Wal-Mart creates "new"jobs, then they should research the case of Bruno's, or Circuit City, or any of the other chains that have died from over-saturated of retail malls. According to a study done in September of 2003 by Retail Forward, entitled "Wal-Mart Food: Big, and Getting Bigger," what happened to Bruno's was entirely predictable. According to Retail Forward, by 2002, Wal-Mart was bigger than the combined sales of the top ten U.S. supermarket retailers. "Wal-Mart has the proven ability to quickly blanket a market with its multi-format approach to become a dominant -- if not the leading market share player in rapid fashion, wreaking havoc for the incumbents." One of those incumbents in Alabama was Bruno's, "Where Home Begins." Retail Forward predicted in 2003 that "for every Wal-Mart supercenter that opens in the next five years, two supermarkets will close their doors. As a result, the supermarket industry is projected to lose 2,000 more stores over the next five years -- or 400 a year!" Bruno's just contributed its modest share to that list. When Wal-Mart comes to town bragging of the 'new' jobs it will create, it's important to remember the lesson of Bruno's in Birmingham. Readers are urged to email the Mayor of Weirton, West Virginia, at: mayor@cityofweirton.com with the following message: "Dear Mayor Harris, I was stunned to hear you claim on TV that Wal-Mart 'actually helps everyone.' Is it possible that you have been living in a retail cave for the past twenty years, and have not seen the economic dislocation that Wal-Mart's have caused? I am emailing you this article about a grocery store chain in Birmingham, Alabama, and how Wal-Mart basically gained market share by taking it from existing merchants. Think about Kroger, and Farm Fresh and the other grocers in your city. Do you imagine they agree with you that Wal-Mart "actually helps everyone?" Wal-Mart actually helps no one but Wal-Mart. All you'll get out of the new superstore is a dead Wal-Mart discount store a few minutes away. If you don't make Wal-Mart pay to tear that dead store down, you may end up with what they call a 'ghost box' to add to your resume as Mayor. The 'new' jobs you think are coming with Wal-Mart, are actually already in Weirton. Just ask the workers at Bruno's supermarkets in Birmingham -- and learn from other city's mistakes. Inviting Wal-Mart to Weirton was like inviting the cannibas to dinner."










 
 
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