Publix Super Markets accelerated its march into Harris Teeter’s home turf Friday with plans to buy seven Charlotte-area Bi-Lo stores.
The locations, which consist of stores in Charlotte, Matthews, Lake Wylie, Huntersville and Rock Hill, will be remodeled and opened as Publix stores in the coming months.
Just a year ago, Publix had no stores open in the Charlotte region. Now, with the addition of Bi-Lo’s stores – as well as new Publix locations being built in Ballantyne, South End, Mint Hill and Cornelius – Publix will soon have 13 area stores open or in development.
“It definitely gets (Publix) that much faster an entry into the market than people were expecting,” said Andrew Jenkins, managing partner of real estate analysis firm Karnes. With Publix looking to expand in a big way and new real commercial real-estate properties still not being built as quickly as before the recession, buying a block of stores was likely Publix’s best option, Jenkins said.
“They can’t build that many stores that quickly,” he said. “There’s not a glut of new space to go in and occupy at this point.”
Florida-based Publix said it plans to keep expanding in North Carolina.
“Publix has a strong financial foundation that allows us to aggressively grow throughout existing markets and our new Charlotte Division,” said Publix CEO Ed Crenshaw, in a statement. The company is also building stores in Cary, Asheville and Winston-Salem as it continues its push into North Carolina.
Financial terms of the Bi-Lo deal, expected to close next month, weren’t disclosed. Publix said that in addition to the stores, the purchase also includes “heavy equipment.”
The deal is the latest change in the Charlotte region’s grocery market, which also saw the partial exit of Lowes’ Foods as that retailer swapped stores with Matthews-based Harris Teeter last year. And Whole Foods, which opened its first local store last year in the SouthPark area, has signed a lease for a second location near Lake Norman.
Harris Teeter is the area’s No. 1 grocer by market share, followed by Wal-Mart, Food Lion and Bi-Lo, according to 2012 data from Chain Store Guide.
The latest deal represents a partial retreat from Charlotte by Bi-Lo, which has 13 stores within 15 miles of Charlotte. The sale will leave it with six Charlotte-area locations.
While it cuts back in Charlotte, Bi-Lo is expanding to the South. The company, which bought Winn-Dixie last year for more than $560 million, said Thursday it plans to buy 22 Piggly Wiggly stores in South Carolina and Georgia. The company is also buying 165 stores, many in Florida, from Food Lion’s parent company Delhaize Group.
“We have and will continue to fine-tune our company and network of stores so that we can reinvest in what matters most for our customers,” said Randall Onstead, Bi-Lo Holdings CEO. Bi-Lo is owned by private equity firm Lone Star Funds.
Supermarket analyst David Livingston of Wisconsin said consumers used to shopping at Bi-Lo could see higher prices under Publix. But, he said, they could also see a more upscale shopping experience.
“Everyone else needs to pick up their game to stay in it,” Livingston said.
In any case, he said Wal-Mart offers a powerful check on how high prices can go. “Wal-Mart will keep them honest,” he said.
Lou Pantusco, an economics professor at Winthrop University, said he doubted there would be much change in grocery prices, because Publix’s size gives its advantages over Bi-Lo. “They can get deeper discounts from their suppliers,” he said.
Harris Teeter, meanwhile, is in the process of being acquired by the Cincinnati-based Kroger Co. for more than $2.4 billion. The company said competitive pressure from rivals such as Publix contributed to its decision to sell.
Jenkins said that while the addition of seven Publix stores to the area puts more competitive pressure on Harris Teeter, none of the new stores are in the affluent Charlotte neighborhoods where Harris Teeter remains firmly established.
“None of those locations are kind of hitting directly at the meat of Harris Teeter’s territory,” said Jenkins. “It’s not like they’re opening up a store in Morrocroft.” Staff writer Don Worthington of the (Rock Hill) Herald contributed.
Portillo: 704-358-5041 Twitter: @ESPortillo
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