Fred's Flagship Store Closing, Getwell Road Headquarters, Memphis, TN

Today's post highlights Shelby County, TN, retail.

Once it became clear that Fred's would not be able to squeeze by with only one round of store closures this year, I quickly realized that I needed to work on documenting locations near me, particularly those which I had a connection to or, better yet, those which hold (held) significance to the chain as a whole. In total (and - assuming Fred's plight is not over yet - "so far"), I've been able to photograph six liquidating Fred's stores. One of those had the honor of being the store that started it all, located in Coldwater, Mississippi, and featured on the blog last month. The store that is the subject of today's post similarly falls in the latter category.

Located at 4280 Getwell Road in Memphis, this Fred's could very well be considered the chain's flagship store, not least because it shares its property with the company's corporate headquarters and primary distribution center. Altogether, the entire complex comprises 58 acres. Not surprisingly given its proximity to the HQ, this store was often used as a testing grounds for new ideas and prototypes; most recently, it was transformed into the chain's "Fred's Super Dollar" concept in March 2010, doubling the amount of food products offered, introducing a new pharmacy and drive-through window, and implementing an entirely new, refreshed look for the chain featuring its then-new logo. Ultimately, this prototype would go on to be adopted chainwide, and would appear in multiple new-build stores as well as existing store retrofits over the course of the following decade.

Many decades prior is when Fred's first occupied the Getwell Road site. Back then, it was known as "New Getwell," and Fred's was relocating there because it had outgrown its previous two facilities. You'll recall from my previous Fred's post that the company started in 1947 in Coldwater, Mississippi, as the Baddour Wholesale Company (with stores branded as Baddour's Bargain Center at first). In that post I referenced a 1996 profile of the company in Southeastern Geographer. Said profile is mainly a study on "the growth strategy/diffusion" of Fred's over its first 46 years in operation. Its authors break the strategy into three stages in accordance with existing research on the topic: origin, growth, and saturation. Their analysis of Fred's diffusion continues (edited for clarity):

In the first phase of the origin stage, from 1947 to 1951, the Fred's stores that opened were clustered in eastern Arkansas and northern Mississippi close to the warehouse in Coldwater, Mississippi. During the four years of this first phase, 13 stores were in operation. 

In the second phase of the origin stage, from 1952 through 1960, 35 more stores were opened. It was during this phase that Paul Baddour, Sr., moved his warehouse from Coldwater, Mississippi to West Memphis, Arkansas, so that it would be more centrally located for distribution to eastern Arkansas where more Fred's stores were opening. In 1955 the company opened a second warehouse in Memphis. This warehouse would become a springboard for store expansion into western Tennessee. 

In 1961 the West Memphis and Memphis warehouses were consolidated under one roof at a new Memphis location. This 75,000 sq. ft. warehouse became the main office of the Baddour Wholesale Company and the distribution center for its Fred's stores. The contiguous clustering of stores in close proximity to the headquarters and distribution center in Memphis continued from 1961 to 1970, the third phase of the origin stage. During this phase, Fred's added 30 new stores, which increased its total number to 78 in three states. Also during this phase, two additional warehouses totaling 105,000 sq. ft. were leased in Memphis as Fred's prepared for its future development. 

The first phase of the growth stage occurred from 1971 through 1981, when 84 new stores were opened. In 1971 Fred's moved into a new Memphis distribution center that had 300,000 sq. ft. of warehouse space. During the next nine years, this center would be expanded to its present size of over 850,000 sq. ft.

To summarize, Fred's began with both its headquarters and warehouse located in Coldwater. In 1951 the warehouse was moved to West Memphis, and in 1955 a second warehouse was opened in Memphis. In the 1960s the West Memphis warehouse was closed and several additional Memphis warehouses were opened, before finally Fred's built a new corporate headquarters and distribution center in 1971. While another distribution center would be opened in Dublin, Georgia, in 2003, this complex at 4300 New Getwell Road is where the company's primary operations would remain for the next 48 years.

Offices for Fred's "Store Support Center," located next to the company's headquarters building. Note how the logo on the building was never updated to the "Super Dollar" era logo. Image source unknown

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In 2015, a new executive named Michael K. Bloom joined Fred's, bringing with him over 30 years of experience in drug store operations, including 20-plus years with CVS. It was during Bloom's tenure as CEO that Fred's entered into the ultimately ill-fated deal with Walgreens to take over its divested Rite Aid stores once the merger between those two chains went through. Bloom made clear to the world that Fred's was pivoting its focus to become a health care business. (Again, for more on this, please read my previous post.)

In an interview in 2017, the Memphis Business Journal suggested, "With the new strategies and potential acquisition you are positioning yourself to be a national contender, but you kind of need the new office space to go with that." In response, Bloom confirmed that Fred's was indeed looking at the possibility of moving to a new headquarters, saying, "We will eventually move out of this facility. That is for sure." However, also in 2017, the Walgreens/Rite Aid merger was cancelled, and alongside it, Fred's expansion plans. This blow sent the company into a free-falling spiral that it has yet to recover from; and accordingly, when asked later that year "Is a new headquarters still part of the plan?", Bloom hedged with a response about "our near-term focus" instead.

Bloom was gone less than a year later, replaced as CEO by a member of Alden Global Capital, the hedge fund that used Fred's expansion fiasco as a means to increase its shares in, and control over, the company. Today, Alden and its founder/president Heath Freeman own the majority of Fred's. And the pair are exercising that control in a myriad of ways, including not only the mass store closures we've seen this year and pharmacy sell-offs last year, but also, as the MBJ reported in October 2018, a potential relocation of the company:

Is a Memphis-based public company planning to move its HQ to Texas? 

Based on its online presence, a Memphis-based public company may have its sights set on a headquarters relocation out of the state. 

Fred’s Inc., a general merchandise and pharmacy chain, currently has job postings on its website and on its LinkedIn for a variety of positions.

The location listed for all of those jobs: Dallas. 

Fred's currently does not have a presence in Dallas; in fact, the city is on the outskirts of Fred's market area, with 14 locations throughout Texas, many of them near Tyler, about an hour and a half east of Dallas. 

The Dallas connection may come via the company's ownership. 

Heath Freeman is the chair of Fred's board of directors. He is also the president and founding member of Alden Global Capital LLC, Fred's largest shareholder, which has a nearly 33 percent stake in the Memphis retailer. 

Alden is also an owner of Payless ShoeSource; that retailer recently saw its headquarters move from its longtime home in Topeka, Kansas, into a 40-story skyscraper in Downtown Dallas: Bryan Tower. 

The owner of Bryan Tower: Randall Smith, the founder of Alden Global Capital. The leasing agent: Dallas-based Spire Realty, whose managing partner is Randall Smith's son, Caleb Smith. 

A few more common threads: Thomas Zacharias, a Fred’s board member since May 2018, is also on the Payless board of directors. 

And the interim CEO of Fred’s is Joe Anto. Prior to joining Fred's, Anto was a senior vice president of strategy and M&A at MediaNews Groups Inc., dba Digital First Media — which is also owned by Alden. 

Fred’s current headquarters is located at 4300 Getwell Road in Memphis. During Fred’s second quarter 2018 earnings call, held in September, Anto said the current corporate headcount was 233 people, down from the 440 people at the start of 2017 and 274 employees in Q1 2018. 

The Memphis Business Journal reached out Tuesday evening to Liolios — a California-based communications firm hired by Fred’s in early 2018 to help with investor relations — but, was informed that Fred’s had recently taken its investor relations functions in-house and was no longer working with the firm. Fred's has not responded to MBJ's request for comment.

Since the time that article was published, the MBJ has continued to collect evidence pointing to the move, the most damning of which was the fact that the current headquarters was "a featured property listing in Colliers International's Market News Q4 2018," showing a "contract pending" for the sale. "Despite all of that, Fred's leadership remained quiet," author Meagan Nichols wrote last month - until the company's 2018 annual report, released June 3, 2019, "finally acknowledged that, effective Dec. 3, 2018, Fred's entered into a lease agreement with Bryan Tower" for office space in Dallas. Simultaneously, "the SEC filing also disclosed that during Q4, the company's board approved a plan to actively market Fred's headquarters for sale," corroborating the MBJ's prior reporting. And ever since those disclosures were made, the evidence has only increased further.

Obviously, one major sign indicating the elimination of the Memphis headquarters was imminent was the closure of the store it shared the property with, photos of which we'll be seeing momentarily. There's also the WARN notice that was filed June 14, informing the state of Tennessee of a "permanent closure" and stating that "the company plans to lay off 155 workers in Shelby County, effective Friday, Aug. 9." And finally, the last nail in the coffin just happened to be announced this morning, rather coincidentally considering I had been planning to write this blog post today regardless:

Fred's sells Memphis headquarters

Fred's Inc. has sold its 58-acre Getwell Road headquarters. 

Montreal-based Olymbec [whose US operations are headquartered in Memphis - ed.] bought the property from the beleaguered discount retailer for $8.25 million. On site are a 758,000-square-foot warehouse, a 65,000-square-foot retail building, and two office towers totaling about 224,000 square feet, according to Olymbec. 

As of a May 3 filing with the Securities and Exchange Commission, Fred’s was utilizing 90,000 square feet of the office space and 22,000 square feet of retail space. 

Olymbec's top local executive, Jason Berger, said Fred's will vacate the premises within "a month or two." Fred's representatives could not be reached for comment Monday afternoon. 

While Fred's remains one of the 11 public companies officially headquartered in Memphis, many signs point toward the company having moved its de facto headquarters to Dallas. 

Olymbec bought the HQ property for its location and combination of uses, Berger said.
"In terms of location near airport, the warehouse and office [combination] ... [and since] the property is serviced by rail ... it is a very unique opportunity," Berger said. 

The office buildings have not received major renovations since being built in 1971, according to Shelby County records. Berger said that he's confident in his company's ability to get them leased. 

"We invest in the diamonds in the rough. ... This is really our bread and butter," he said. "We understand the challenges of the property but, at the same time, understand its great potential to attract the next company to relocate their HQ to Memphis." 

Berger repeatedly stressed the competitive rental rates and tenant-improvement packages his firm will be offering on both the warehouse and office buildings, which it hopes to lease as a package. 

Olymbec owns a large amount of warehouse space near Memphis International Airport. The company's modus operandi is to lease out old buildings at low rates while making improvements for particular tenants — as opposed to embarking on major redevelopments.

In short, the latest development in the ongoing Fred's downfall saga is that the retailer's corporate offices are abandoning its longtime Memphis headquarters, and indeed its core region of the Mid-South, in order to operate out of Dallas, where its new hedge fund owners are based. Technically, the SEC filing that disclosed the move indicated that the new office space is currently under construction, with temporary office space provided at no cost in the interim. Personally, I don't think the workers need to worry about finishing that construction... at this rate, Fred's won't be around much longer to occupy it once it's complete.

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With that out of the way, let's now turn our attention to my tour of the Getwell Road headquarters-adjacent Fred's store during its liquidation sale.

I visited this store on May 24th, 2019, a week out from its projected closure date. As you can see from these exterior photos, it is literally right next door to the corporate headquarters (as advertised!). The angle looking up from this parking lot to the higher-elevation lot next door and including both the store and the HQ in the frame is one that was used for many a stock photo attached to news articles on Fred's over the years.

It's plain to see that the exterior detailing on this building is a mix of old and new. The gray and blue portions of the facade were installed during the 2010 renovation, but I'm sure the older brick and stone columns have been here for a very long time, if not since the beginning.

Heading indoors and looking straight back, we see the place is pretty wiped out by the time of my visit. With only seven days remaining, that makes sense.

The pharmacy was located directly upon entering in the front right corner, for ease of access to customers both inside the store and outside (as this setup allowed for a drive-thru window). The pharmacy, however, closed in late 2018, when Fred's sold over 100 of its pharmacies' prescription records to Walgreens. Following that sale, the former pharmacy counter in this store - and, I'm assuming, other Fred's locations as well - was gutted and opened to customers as a space selling, of all things, mattresses and appliances. (Who are they trying to be, Kmart?! Actually, given their current status, I'd say they're emulating Kmart rather well XD )

The aisles directly in front of the erstwhile pharmacy counter were home to health and beauty items; these are some various views from within those aisles. Not much left to see at this point. This was my first Fred's visit since Coldwater, which I visited a month prior, much earlier on in the liquidation sales, so I was surprised to see the difference in merchandise selection between the two visits.

Looking back up to the front, then at the next department over along the right-side interior wall. The wall itself acted as home to the greeting cards, but the merchandise you see in the aisles in front are not indicative of those aisles' original departments; instead, merchandise had been consolidated forward into the salesfloor over the course of the liquidation.

And in these photos we can see what was left behind by all that consolidation: a whole bunch of empty gondolas, lining the entire back half of the salesfloor. Surprisingly, these aisles were not marked off by caution tape (a practice commonly carried out in liquidation sales). Still, though, I didn't explore them too thoroughly, as I knew they were likely intended to be off-limits nonetheless.

Looking along the very back actionway of the store, right up against the rear wall, we find yet more empty shelves, as well as a selection of fixtures set aside for sale. Fairly reasonable prices, too. I was actually somewhat interested in a fixture from this store myself (not one you see in these pictures, though), and to my surprise, the kind employee who handled our transaction at the register quoted me the best price possible: free! (Really wish I could remember her name... I believe she was an assistant manager.)

Some views now as I walked away from the fixture sales area, and back towards the center of the salesfloor. The back center of the store was evidently home to apparel, given the absence of gondola shelving units and presence of those clothing racks instead. Very little in the way of clothing remained, but I will say, that "Country Roads Take Me Home" shirt you see in the bottom image happened to be in my size and is now a part of my wardrobe!

A few additional views from apparel looking elsewhere across the salesfloor. The crowd while I was here was very much on the lighter side, which is a refreshing change of pace from the normal mobs of people that attend liquidation sales.

Here are a couple of pics from the pet department aisles, followed by a glance back over toward the right-side wall (where those greeting cards were). Note that those sturdier, more industrial-looking shelving units from the pet aisle actually appear to have been sold.

  

These three shots come from the store's front half of aisles, which were where the bulk of the remaining merchandise could be found (and consequently, where the few shoppers were concentrated as well). The bottom pic in particular shows a relatively new but now-disused promotional sign bearing the new Fred's logo and storebrand packaging.

  

Returning to the middle actionway, the top view above takes a look over to the store's left-side wall, while the bottom shot focuses specifically on the shelving unit you see on the left side of the top image. This area of the salesfloor previously stocked household merchandise, including hardware and cleaning supplies.

A view across the entirety of the salesfloor, from the same spot in the actionway as the two previous images were taken.

Heading down the left-side actionway now, approaching the registers in the front center and the food department in the front left corner. Note how the aisles along the left- and right-side perimeter walls run perpendicularly to the rest of the aisles in the store. I feel like this made for a nice layout. This store also had a considerably more spacious feel to it as compared to the Coldwater store I visited the month before, although that's largely due to the difference in square footage between the two.

  

These shots were all taken from within the food department aisles, focusing on various angles. For instance, the top pic looks at some of the hanging liquidation signage straight-on (as well as a view across the store, heading off into the background), while the second one looks at the department signage and the refrigerated and frozen cases below it. The other two photos examine some Fred's branding, both on shelf tags and products. Note how the former feature the old logo, and the latter the new.

  

Glancing back down the left-side actionway toward the rear of the store, before returning our focus to the food department. The signage style you see in this store may be newer than the 2010 remodel - I'm not sure on that front - but it's still established enough to be found in many newer-model Fred's stores, including new-build stores that opened down the road in Southaven, MS, circa 2013. Unless a newer décor package was introduced past that point, I'd say this is still Fred's most recent look.

Taking a close-up of some liquidation signage resting on one of the food department shelves, followed by another view down the left-side actionway toward the back left corner of the store. Once again, an example of the "LOW PRICES!" department signage is visible. Obviously, Fred's was leaving customers guessing as to what it was emphasizing :P

Here's a look across the front actionway as seen from beside the entrance to the registers, as well as the scene from within the checkout queue itself. The queue setup was new to Fred's, likely another feature implemented in the 2010 remodel; most other Fred's stores have individual checkout lanes. Note the blue register lights, too; those are different from the style I've seen in all the other stores I've been in.

Placed near the front entrance were these two displays, one showcasing all the fixtures available for sale (and noting that they had now gained a 50% discount, given the proximity of the closure date) and the other alerting customers that the sale - and the store - was entering its final seven days.

One last interior shot, this time looking at the entrance as viewed from inside. Exiting those doors...

...we find ourselves back outside again, for some final parting pics of the store's exterior.

This store had received a "STORE CLOSING" banner, something I hadn't seen at the Coldwater location. However, I assume that's another difference that can be attributed simply to the time that had passed between my two visits, and the fact that this store was closer to its last day at the time I stopped by. This particular shot should also give you a good look at the architecture of the building that was not altered in the 2010 remodel.

We know the headquarters building flanked the store on its right, but next door to the store on its left side was a giant lot used to house Fred's fleet of eighteen-wheelers, used in tandem with the distribution center which was also located on the property. It's been out of view behind the store and HQ in all of my photos, if I understand the layout of the complex correctly.

The store has already been closed and (I'd assume) a majority of the head office workers are being laid off in advance of the relocation to Dallas, so there are no lingering logistics issues there... but I do wonder what happens now insofar as the Memphis distribution center is concerned, seeing as how the property has been sold. Will the Dublin, Georgia, distribution center now handle distribution for the entire chain? Sure, there will be considerably fewer stores to deal with now that nearly 60% of the locations have been cut, but that still doesn't address the geographic range of those remaining stores in relation to the location of the warehouse...

This pic takes a look over toward the edge of the parking lot, where a tall roadside sign stands. It's not hard to imagine this has been here for quite some time, and was only recently retrofitted to the version of the Fred's logo and "LOW PRICES!" tagline you see it displaying.

Here's one more view from the store's parking lot looking up towards the HQ next door, followed by a couple of quick snaps taken while driving past the headquarters building itself. My initial thought was that it was going to be quite an embarrassment to have your onetime flagship store sitting vacant directly next to your headquarters building, but I guess now that Fred's corporate is leaving Memphis entirely, they won't have to worry about that after all! (Kind of a lousy plus side though, if I've ever heard one :P )

Last up from the property, a few parting wide shots from the road. Note how the "PHARMACY" sign next to the Fred's logo has been blacked out, and the drive-thru window shuttered. The small space you see next to the drive-thru window is actually a separate storefront, separated from the store's square footage years ago. Apparently, Fred's felt the building was so large they could downsize the store somewhat and still have a suitable flagship location! In its later years, I believe that adjacent space was home to EntrustRx, a specialty pharmacy business Fred's operated (and which they sold off in 2018 to an affiliate of CVS, the first of many offloading moves they've made in the past two years).

Courtesy CoStar

EDIT, November 2020: I recently came across this image of the headquarters-adjacent Fred's store featuring an earlier exterior design, and thought it would make a good addition to this post.

Finally, I'll end this post with a trio of pics taken after I had returned home, showcasing the liquidation flyer, my receipt, and the tag from my shirt (taken for the Fred's logo more than anything else). While it's sad to see any Fred's store close, it's even more shameful that this one was the flagship location... and worse still that Fred's has elected to relocate entirely, abandoning its longtime home in Memphis and selling its corporate headquarters. Fred's is truly no longer a Mid-South business, in more ways than one.

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UPDATE: After I published this post, I came across another article on the HQ sale from local TV station WREG, which indicates that Fred's is in fact not leaving Memphis but relocating to a new office in the city. Here's an excerpt:

WREG went to the Memphis headquarters on Tuesday. None of the employees wanted to speak on camera, but they did tell us they heard the company was moving the Memphis office to another location by Highway 385 and Kirby. 

We asked employees if they heard anything about layoffs, and they said they hadn't.

This way, Fred's is able to avoid any legal headaches of moving the company's official headquarters away from Memphis, even if for all intents and purposes the remaining Memphis office will likely be just for show. It also serves as good news for those employees, although I still believe the WARN notice will be affecting some workers at the property (and who knows how many remain at this point, either). The offices may be staying in Memphis, but I'm still very curious about the fate of the warehouse/distribution center and its employees.

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I'll keep my eyes on Fred's updates as they develop, and continue to bring you liquidation tours of local Fred's stores in future posts as well. For our next post, though, I'll be featuring some images I recently found in my inbox courtesy of my friend Northwest Retail. You won't want to miss it! Until then and as always, have fun exploring the retail world wherever you are :)

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