Two mid-size supermarket chains, Bi-Lo, and Top Friendly Markets, are preparing for possible bankruptcy filings, according to a report from Bloomberg. Bi-Lo plans to close nearly 200 stores, according to reports, and the chain filed bankruptcy previously in 2005 and 2009 as well. With more than $1 billion in debt after its 2005 buyout by Lone Star Funds, last year Bloomberg also reported that possible solutions might include a debt-to-equity swap or asset sales.
The buyouts come as no surprise, particularly with challenges coming from other grocery chains which are ushering in dramatic changes to their operating models. Amazon’s launch of its Amazon Go store may be just a pilot, but it’s the biggest talk of the town in the retail grocery business. Amazon Go allows customers to walk in, scan items with their smartphone as they place them into their shopping carts, and then simply walk out of the store. Payment is automatically rung up and deducted from the shopper’s bank account. Kroger too, is following Amazon’s lead with innovations of its own, including a large 400-store pilot called Scan, Bag, Go, which works much the same way, although instead of just walking out of the store, shoppers will simply wave their smartphone app at the register on the way out.
The grocery business isn’t the only retail segment facing upheaval, noteworthy closings are making the headlines for several major chains.
Despite widespread closings and retail bankruptcies, the so-called “retail apocalypse” remains a myth, and most retail analysts note that what’s going on is more of a shift in business model. The traditional shopping mall and cookie-cutter store formats are just not as popular with a younger demographic, who are looking for a more bespoke experience. In addition, online retail has reached a level of maturity, so those retailers who fail to elevate their online strategies to being equivalent to brick-and-mortar are destined to fail.