“SEESSEL’S SUPERMARKET CHAIN IS
PURCHASED – AGAIN.”
Sounds like trouble, doesn’t it? In
addition to the headline – which definitely doesn’t do the
situation any favors – reading further reveals that this is the
second time the Memphis-based chain is changing hands in a little
more than a year.
Things weren’t always like this.
For years, Seessel’s ran with
widespread community support; with a history dating back to 1858, the
family-owned operation was the leading independent grocery store
chain in the Memphis area as the year 2000 neared. It also had the
second largest market share of any grocery store in the Memphis area
by that time, and catered to upscale and gourmet customers, but with
an unmatched loyalty from the majority of locals.
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| 1923 Model-T used by Seessel's, seen 2014 in the Pink Palace Museum. Courtesy flickr |
The great-great-grandsons of the
original founder sold the company in 1987, but bought it back a year
later due to poor management. Then, in December 1996, the Seessel’s
ten-store portfolio was sold to Bruno’s for $62 million.
This sounds like a story of acute
attentiveness: Art and Jerry Seessel, no longer interested in running
the family grocery business, sold the chain, but, realizing it could
fail, bought it back so that they could sell it to a more fit buyer,
one better positioned to rise to the task of running Seessel’s.
Unfortunately, while the first part may be true, the second proved
opposite. Bruno’s bought the chain while concurrently dealing with
an accumulation of debt. Inevitably, Bruno’s found itself needing
to shed the new stores not long after buying them – in January
1998, in fact, barely one full year later.
Albertsons, a national supermarket
chain based out of Boise, took the bait, paying $88 million for the
ten stores, as well as the central bakery and commissary that
supplied them. Internal corporate executives considered the deal “a
significant market entry opportunity for Albertsons [that]
accelerates our entry into that marketplace by several years.”
Albertsons, already planning three area stores, had now taken
ownership of ten, complete with established locations and customer
bases; not only did this look good for the immediate prospects
post-purchase, it also painted a bright picture for future, organic
expansion within the market.
 |
| Albertsons company logos, including that of Seessel's, on an old recycling bin, seen 2011 in Lake Charles, LA. Courtesy flickr |
The grocery giant took a more quiet
approach in regards to naming their new stores, simply adding a
byline – dubbing them “Seessel’s by Albertsons” – and
rolling them into their southeast division; other stores purchased in
the region outside of the ten Seessel’s stores, as well as multiple
new builds, allowed Albertsons to operate under their own name. Soon,
Albertsons gained enough of a presence in the area to establish a
regional office in Memphis as a part of the chain’s corporate
hierarchy. Armed with a concept introduced the same year in their
Texas stores, Albertsons set out to deliver to their Mid-South
customers, Seessel’s and otherwise, the ultimate in convenience:
“Themed destination areas throughout the store denote such areas as Snack Central, Beverage Boulevard, Party Central, Pet Care Center and International Deli, where 73 varieties of cheese are offered. A wharf motif overlooks the Butcher Block and Fresh Seafood site, where shoppers may have purchases steamed for free or marinated and seasoned while they shop. Customers can request a prescription at one pharmacy window and pick up the completed order later at another window facing the central part of the store. … [T]he store’s Meal Center…will offer traditional deli items along with such ready-to-eat entrees as prime rib. … ‘The produce department offers all the best fruits and vegetables. Plus a lot of what we call Quick Fixin’ Ideas will be displayed throughout the store every day for quick, fast meals.’ … Store aisles will incorporate coolers to place cold pasta, puddings, pickles, beverages and salad dressings beside their warm counterparts.”
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| An example of the over-the-top décor package (Grocery Palace, or Theme Park) Albertsons used in the Mid-South, seen 2007 in Winter Park, FL. Courtesy jazno.net |
Though this excerpt is from an article
noting the opening of an Albertsons store in Tupelo in 2000, the
features described are fairly typical of what was being implemented
in all of their Mid-South stores. In addition to all of the above,
Albertsons and Seessel’s by Albertsons stores incorporated bank
branches, flower shops, photo centers, video stores, fuel stations,
even Starbucks kiosks. Albertsons began to renovate existing
Seessel’s stores as soon as they owned the brand, and continued to
expand within the market, with as many as six stores under
construction – and two in the planning stages – at one point
during their tenure in the Mid-South. They built a new store in Horn
Lake, the first in the region to feature both garden and promotional
centers; they purchased three Jitney Jungle stores in Memphis as a
result of that company’s bankruptcy, reopening them under the
Seessel’s banner; they constructed a new store only a mile away
from an existing one, directing customers to the former as they
performed an extensive renovation on the latter, fashioning it into a
Broadway-market style store unlike any of their other Mid-South
locations.
That store that underwent the
Broadway-market remodel was located at 576 S. Perkins Road in Memphis
–
a favorite of the blog. It closed for construction on October 25,
1999, and reopened sometime second-quarter 2000. That means it,
compared to the rest of Albertsons’ Mid-South fleet of stores,
likely had even less time open under the chain’s management.
A retail analyst noted in 2002, “When
Albertsons bought Seessel’s in Memphis, it looked like such a
steal, but a lot of the stores were beyond saving.” A customer’s
opinion, written on a forum in 2009, is that “the years of
ownership under cash strapped Bruno’s and a heavily leveraged
Albertson’s had allowed food quality to slip and service levels
were cut.” Whichever is the truth, it’s clear Albertsons was not
experiencing positive enough results to match their efforts, and
perhaps even was not putting in extensive enough efforts underneath
their grandiose façade.
Albertsons opened the aforementioned
Tupelo store in April 2000, only to close it and sell it to Kroger in
January 2002. Similar stories played out across all of their
ground-up stores throughout the Mid-South. Finally, on March 13,
2002, with only the Seessel’s branded stores remaining in their
portfolio, Albertsons announced it would be completely exiting the
Mid-South: a new headline was published which read, “Albertson’s
saying good-bye to Memphis; closing, selling Seessel’s stores.”
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| Former Seessel's by Albertsons near Riverdale Road in Memphis. Schnucks closed the store in 2003 after entering the market but continued to operate the fuel center out front. Kroger's KwikShop runs the fuel center today, while the store still sits vacant. Image source unknown |
The departure was a decision spurred by
new corporate management; the Seessel’s divestiture was joined by
market retreats from Nashville, San Antonio, and Houston, resulting
in considerable job loss and over 150 store closures. Locally, having
grown from ten stores in 1998 to as many as 16 at the turn of the
millennium, the Seessel’s chain was left with just 12 stores –
and no owner – in spring 2002.
All in all, though regarded with mixed
reviews, Albertsons led an ambitious – if ill-timed – effort in
the Mid-South. Following their lead, Schnucks endeavored to do the
same.
Family-owned and based in Saint Louis,
Schnucks purchased the 12 Seessel’s stores, as well as 6 Albertsons
Express gas stations and convenience stores, on April 30, 2002, for
an undisclosed amount of money. Perhaps it was comparable to the $88
million Albertsons had paid for ten stores and zero gas stations four
years prior – but at that time, Seessel’s was second in the
marketplace; Schnucks, meanwhile, assumed the third place position
Albertsons vacated. Nevertheless, they committed, as Albertsons had,
to delivering the Seessel’s experience shoppers were used to, but
with much more individualized attention, given that “Albertson’s
somewhat ignored this marketplace,” per Craig Schnuck himself. From
the get-go, however, Schnucks made a critical mistake: they decided
to deliver that high-end, upscale Seessel’s experience sans the
Seessel’s name.
Regardless, Schnucks put in an
impressive effort, indeed. There’s much to be said on paper: though
they closed one of the Albertsons-built stores directly following the
purchase, they committed to “immediate renovation and remodeling of
all stores” remaining, in what the company considered “Phase I”
of a strategic program. “Schnucks Embarks on Second Phase of
Memphis Expansion” was the headline in July 2004, as the company
detailed plans for multiple new stores to anchor completely new
shopping centers, a minor miracle for local economies. Their first
ground-up store in the market, located in Collierville, acted as an
ideal for the rest of the group, including what was already present
and what was to follow:
“The new Collierville Schnucks showcases fruits, vegetables, and other perishables displayed ‘open market’ style in a distinctive format featuring vaulted ceilings and archways. It’s the first of its kind among Schnucks Mid-South stores. … [T]he store includes a full-service florist, an in-store pharmacy, and an in-store bakery specializing in custom cake decorating. The location also features a cold beverage bar, a deli and grill with a separate cash register and seating section, a service seafood department, and a hot- and cold-food and salad bar.”
Schnucks made an effort to invest in
the Mid-South, responding to customers’ feedback: for example, they
became especially involved in improving the Union Avenue store in
Midtown Memphis, the smallest and oldest of the former Seessel’s
stores; they quickly remodeled the store’s interior, and began
purchasing surrounding parcels of land and probing the community
regarding the possibility of building a new, larger store in the
site’s vicinity in the future. The chain also adopted the fuel
center concept they had entered into with the former Albertsons
Express stations, opening fuel centers at their new Mid-South stores
as well as introducing and purchasing/converting yet more across
their entire corporate footprint.
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| Interior of Union Avenue (Midtown) store, featuring - similar to the S Perkins Albertsons - a unique décor Schnucks used in none of their other Memphis metro locations, seen January 2016 during final days in operation prior to demolition. Courtesy Downtown Memphis Blog |
Again: this all looks great on paper.
But in person, it seems Schnucks was not meeting customers’
expectations as well as they had hoped or publicized. While not
necessarily their own fault, Schnucks fell victim to the
disassociation of “the Seesel’s [sic] name…with an upmarket
operation,” suggested an internet user; a managing partner of a
local commercial real estate business agreed that “the stores had
already lost much of their customers’ loyalty by [2002], and the
acquisition didn’t bring them back,” fresh start or not. A
separate internet commenter in 2007 concurred: “The local take
tends to be, ‘We hate Schnucks, but there is nothing better.’”
A retail analyst’s 2004 evaluation of Schnucks’ Mid-South efforts
– “Because it is one of the last great family-owned and operated
businesses, they understand the heritage of what Art Seessel did in
Memphis” – may be true, but understanding and practicing are two
different things.
Schnucks abruptly cut its fuel rewards
program at its Mid-South stores in August 2011. Soon after, on
September 2, 2011, amidst swirling rumors – yet despite corporate
denial – Schnucks announced that it would be exiting the Memphis
area, selling nine of its stores to dominant market grocer Kroger.
Schnucks went on to close the remaining three; Kroger closed one of
its new purchases and two of its own existing stores, while keeping
all of the Schnucks gas stations and convenience stores and
rebranding them as Kwik Shops.
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| Vestibule of Truse Parkway Schnucks, featuring original Albertsons wood paneling and lettering, seen September 2011 during Schnucks' closeout sale in advance of market exit. Courtesy flickr (visit user's album, too) |
For what it’s worth, Schnucks stuck
around longer than Albertsons did. They didn’t leave on the most
favorable terms, though, especially considering their employees were
given little notice and no severance. Said Scott Schnuck, chairman
and CEO, in a statement on the departure:
“Despite the best efforts of our talented store teams and a strong customer following, we were unable to gain the strong foothold we had hoped for when we entered the market in 2002. Schnucks competes very favorably in other markets, but in the Mid-South, fierce competition including a growing number of non-traditional grocers and a lingering high price perception was the one-two punch that brought us to today’s announcement.”
The two facets touched upon in that
quote – competition and high prices – are rather complex.
Starting with the latter: Schnucks entered the market in 2002
pledging to uphold the Seessel’s experience mentioned previously;
this meant “shoppers can expect to see high-quality goods and
high-end service.” With that, naturally, comes high prices; so, the
“lingering high price perception” was somewhat brought upon
Schnucks by themselves.
The competition note is another one of
interest. The Memphis grocery market has become uniquely competitive,
while paradoxically lacking much actual competition. Schnucks cites
“non-traditional grocers” – without a doubt, there are many of
those, especially now, since Schnucks’ departure: Whole Foods, The
Fresh Market, Sprouts, Trader Joe’s, etc. In that sense, the
Memphis grocery market is highly competitive. But in the other, more
traditional sense of strict grocery stores – not trendy, organic
merchants or all-in-one, conglomerate supercenters – Kroger is now
the only one left. In fact, Schnucks’ exit was enough for Tennessee
Congressman Steve Cohen to petition the Department of Justice to
investigate whether the sale to Kroger presented any anti-trust
violations. The locally-owned alternatives to these three degrees of
national corporations are so numerous and unrelated that there really
is no one comparable party large enough to make a dent in Kroger’s
near monopoly in Memphis.
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| Interior (featuring perhaps original Albertsons checklane lights) of the Whitehaven grocery store on Shelby Drive, one of the Schnucks stores Kroger purchased, seen 2013. Courtesy Memphis Daily News |
From Kroger’s viewpoint, this is
definitely considered a success. An article headlined “How Kroger
has gained from rivals’ mismanagement” specifically references
the Seessel’s situation; the chain’s Delta Division is
approaching a store count of 40 with no viable competitor, and is
furthermore launching its Marketplace concept to compete with Walmart
and Target. This isn’t to say that Kroger is faceless or attempting
to take advantage of Mid-South consumers, though:
Joe Bell, then-manager of marketing and public affairs for Kroger Delta, in 2013 said “the company was ‘surprised and confused’ by negative reaction that followed Kroger’s 2011 acquisition of the area Schnucks chain. He points out that Kroger has been in Memphis since 1928[, and] notes that Kroger was cited for its benevolence by Forbes, that the company does charitable work with women’s health organizations, that they proudly support the Mid-South Food Bank. But… but… many around these parts seemed to take Kroger’s acquisition of Schnucks personally. Bell admits that Kroger’s PR approach was to ‘stay under the radar.’ Now they are taking a new approach with two goals: ‘be more visible, be more accessible,’ says Bell.”
Largely, Kroger has kept to those
goals. They have spent $118 million renovating, remodeling, and
upgrading their Mid-South stores, and have strengthened bonds with
the community. They’re even making good on their promise to build a
new Midtown store on Union Avenue – an endeavor Schnucks had toyed
with previously, as mentioned earlier, to no avail.
Still, this doesn’t disguise or make
up for the lack of competition; Memphians yearn for other options,
specifically Publix, and there’s no need to cite a source for that.
That’s simply the aftermath of
Seessel’s.
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Although no more than a select few are directly quoted above, all of the articles below not only were used in writing this post, but represent a chronological Internet timeline of the Seessel's history. If you would like a more in-depth look into the chain's past and the events that have led to the present state of the grocery market of Memphis and its surrounding metropolitan area, I encourage you to peruse the links below and investigate further on your own - there's plenty to be found!
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If you're a local and have a Seessel's story of your own to share, please feel free to do so in the comments to this post - your experiences are just as much a part of the history as all those articles! Additionally, if you're interested in more on Albertsons' local operations, check out
my special flickr series investigating Albertsons in Mississippi. In the meantime, that's what's happening in the Mid-South, and has been for some time now... until next time, have fun exploring the retail world wherever you are!
Retail Retell
