Piggly Wiggly Southern, Inc. History

Address:

100 Brinson Road
Vidalia, Georgia 30474
U.S.A.

Telephone: (912) 537-5500
Fax: (912) 537-1211

Wholly Owned Subsidiary of Bruno's Inc.
Incorporated: 1919
Employees: 6,000
Sales: $660 million
SICs: 5411 Grocery Stores

Company History:

Food retailer Piggly Wiggly Southern, Inc. is an immediate subsidiary of Bruno's Inc., a food and drug chain company which operates and leases food, drug, and liquor stores in five southeastern states, with the heaviest concentration in Alabama, Georgia, and Florida. Bruno's acquired Piggly Wiggly Southern in 1988, adding it to its FoodMax, Food World, Food Fair, and Bruno's Food and Pharmacy franchises. By 1993, 57 Piggly Wiggly supermarkets were in operation, located largely in central and southern Georgia, representing 22 percent of its total number of stores. That year, to cut costs, Bruno's moved the Piggly Wiggly Southern corporate offices to Birmingham, Alabama, integrating them as a unit in its home office. However, it left the Piggly Wiggly distribution center in Vidalia, Georgia, its original base. Bruno's, under competitive pressure from other chains, notably Wal-Mart and Publix, was at that time restructuring its operations, closing unprofitable stores, remodeling others, and altering some of its marketing strategies. It was also recovering from a tragic air crash that in late 1991 had claimed the lives of Angelo and Lee Bruno, son and grandson of the company's founder, and four other company executives. Because of its restructuring, innovations, and the improving economy, the picture for Bruno's and its subsidiaries, including Piggly Wiggly Southern, brightened after 1993.

Although the food store chain concept was invented by A & P in 1859, the self-service food market came into being as a direct result of the first Piggly Wiggly store, established in Memphis, Tennessee by Clarence Saunders in September 1916. Prior to Saunders' introduction of Piggly Wiggly, grocery chains were essentially "economy stores," which had replaced home-delivery and credit sales with a cash-and-carry system but were not planned for self-service. Saunders' first store, the forerunner of contemporary supermarkets, was designed to allow customers access to shelved merchandise which they would select and carry through turnstiles to checkout counters.

The plan was extremely successful, and the original Piggly Wiggly company extended franchises to hundreds of independent grocers who wanted to use the system and operate under the Piggly Wiggly name, giving the company a very complex history. Even some of the leading food chains, like Kroger and Safeway, operated stores under the Piggly Wiggly name before converting their parent stores to self-service. By 1920, stores under the Piggly Wiggly name were doing an aggregate $60 million per year business, with 35 stores in Memphis and hundreds in other cities and towns. The following year, Saunders and his organization had direct control of over 350 Piggly Wiggly stores, and there were many others operating on a royalty basis, paying a half percent of their gross sales to retain the franchise rights.

Among the companies that would eventually operate under the Piggly Wiggly name was the Tanner-Brice Company of Vidalia, Georgia. It was founded in September 1919, by Mitchell F. Brice with the financial backing of E. L. Tanner, his father-in-law. Tanner-Brice was incorporated to wholesale and retail "groceries, dry goods and merchandise generally." Operating in rural Georgia, the company often did business on a bartering rather than a cash basis, particularly with farmers who could exchange eggs and butter for flour or other processed merchandise.

In the 1930s, during the Great Depression, which hit farm areas very hard, the Tanner-Brice Company grew through consolidations and foreclosures. The company had extended credit and had no choice but to seek legal redress when debtors defaulted on loans. The first such business legally conveyed to Tanner-Brice had been managed by a Mr. Sims, a former A & P employee. Thereafter, Tanner-Brice operated its small retail grocery stores under the name Sims Service Stores, Inc., reserving the Tanner-Brice name for its wholesale operation. The typical Sims store, like the one in Dublin, Georgia, was a long and narrow "shotgun store" with less than 4,000 square feet of floor space, and although the company started building larger stores nearer the end of the Depression, most of them into the World War II era were still small, "mom and pop" operations.

In 1941, under tight money constraints and pressure from such competition as A & P (which had more efficient supply and marketing arrangements) and unable to keep up with the product demands of his customers, Mitch Brice decided to sell his controlling interest in the company in order to concentrate on his other business interests. A salesman named Phil Friese, aware of the company's difficulties, convinced the Schroder Trust Company of New York to take over the firm. At the time, with Friese as the new general manager, Tanner-Brice had 76 retail stores in operation. Brice retained a one-sixth share of the business but stepped down from the company's presidency to devote time to his banking and movie theater interests.

In what proved to be an astute policy, the new owners of Tanner-Brice decided to include existing company supervisors in the firm's restructuring and to institute an optional profit-sharing plan. Credit for these decisions can be given to Hugo Meyer, who represented the majority stockholders. Meyer also convinced a friend, Gerald H. Achenbach, a Wall Street investment counselor, to take over the Tanner-Brice presidency, surmising that Achenbach's skills and experience would be invaluable in the company's restructuring. Achenbach went to Georgia with the idea of propping up the operation and then moving on, but he ended up staying on with the company until his retirement.

Among other restructuring measures, the new management liquidated the wholesale end of the business because the gross retail sales were 800 percent greater than the wholesale sales. Then, in 1943, Achenbach and his chief associates, who believed that the self-service food market was the best model for future expansion, entered into an agreement with the Piggly Wiggly Corporation. In a policy summary written during that year, Achenbach argued that the Piggly Wiggly arrangement would allow for "bigness" without sacrificing "personal influence" to impersonal protocols.

On an experimental basis, the company began converting selected Sims stores to Piggly Wigglys, starting with a store in Americus, Georgia, in July 1943. Convinced that the conversions to the Piggly Wiggly format would prove of great benefit to Tanner-Brice, in 1945 the company changed its name to Piggly Wiggly Sims, Inc., joining the two trade names under which it then operated.

Some further adjustments were necessary to keep the company on firm footing. In one problem year, 1946, the company, operating a chain of 36 stores, netted a profit of only $5,000. Financially, the situation improved after 1947, when an outsider from Tennessee, J. A. Crockett, joined the firm and set up a much more effective system of accounting and identifying profit-margin problems. In 1948, the company was able to buy six Piggly Wiggly stores in Macon, Georgia, franchises that also traced their beginning back to 1919, when Clarence Saunders, the Piggly Wiggly originator, advised some Macon merchants to get into the self-service grocery business.

It was also in 1948 that the company warehouse in Vidalia was reorganized by its new superintendent, E. G. Weathers. With the marketing skills of other personnel, including Fred Stewart, D. Larkin Temples, and Weathers' successor, E. K. Stafford, Sr., Piggly Wiggly Sims quickly became one of the most modern and efficient food distribution centers in Georgia.

Throughout the 1940s, Piggly Wiggly Sims had pursued a policy of closing stores that either by size or age presented modernization or expansion problems. The plan had been to remodel select stores in order to make them the most up-to-date supermarkets in their communities. By 1950, firmly convinced that it had made the right decision to make the changeover complete, the company converted its last viable Sims stores to Piggly Wigglys and changed the company name to Piggly Wiggly Southern, Inc. While the conversion and closing policy for a time resulted in a reduction in the total number of stores that Piggly Wiggly Southern operated, falling to a low of 27 stores in 1960, the decline in the total number of stores was misleading, for in 1961 26 stores generated $25 million in sales, while in 1941 76 stores, most of them small, mom and pop stores, had generated a total sales of only $2 million.

In 1952, in a move to centralize it operations, Piggly Wiggly Southern had moved its corporate headquarters into a new building in downtown Vidalia. Two years later it bought a large warehouse, which allowed the company to distribute a greater variety and larger number of foodstuffs. At about the same time, following a policy of employee participation in company policy making, the company extended the previously limited profit-sharing plan to all employees and instituted a pension plan. The company was also flexible and aggressive in its marketing techniques, and throughout the 1950s used such attractions as S & H Green Stamps and price war strategies to keep its customers from defecting to its competitors.

Later in the 1950s, while continuing to expand its self-service food market business, Piggly Wiggly Southern also incorporated two subsidiaries. The first was a printing company operating under the name of Southern Graphic Arts; the second was a chain of auto parts stores operating as Whiteway, Inc. The first of these proved very profitable, and by 1977 it was printing 23 weekly newspapers. However, the Whiteway stores struggled, and after four years of operation had just reached a break-even point. The Whiteway enterprise was then liquidated, after accumulating a before-tax loss of about $600,000.

In the early 1960s, the company realized the need for yet a more efficient, centralized operation. By then it was distributing foods from nine different warehouses scattered around downtown Vidalia. It solved the problem by moving into new buildings outside of Vidalia, built in the green hills that lay in the suburbs to the east. The new office complex and expandable warehouse went into operation in 1967. The offices were comfortable and spacious, while the gigantic, 500,000 square foot warehouse was outfitted with the latest climate control equipment and boasted 65,000 square feet of frozen storage space.

The number of Piggly Wiggly Southern stores continued to increase through both the 1960s and 1970s. Newly started stores were larger and better equipped than the old Sims stores and offered a much greater variety of foods and services. In 1977, the company opened a 40,000 square foot Piggly Wiggly in Augusta, Georgia, about 100 miles north of Vidalia, with such new features as an in-store bakery, a flower shop, and a delicatessen with booths where hungry shoppers could sit and eat lunch or just drink a soda. The store, the 61st operated by Piggly Wiggly Southern, was widely regarded as one of the most beautiful commercial buildings in the South. It was also an instant financial success, recording gross sales of $155,000 in its first week of business, a company record.

Throughout its post World War II expansion, Piggly Wiggly Southern pursued a deliberate policy of promoting from within, and for that reason took special care to groom its employees for potential advancement through the managerial ranks. Among other things, it instituted orientation and self-improvement programs for its employees, designed to make sure that they would have adequate training to take on new responsibilities within the organization. The result was that most all the senior executives in the company had at one time first worked at such lower-end jobs as part-time clerking in one of the old Sims or newer Piggly Wiggly Stores. For example, Ronald A. Frost, who succeeded Achenbach as president, had started in the business by sweeping the floor of his father's store in Wrightsville, Georgia, with a stubby broom.

In the 1980s, Piggly Wiggly Southern became the leading supermarket chain in the central and southern Georgia region. By 1987, it was serving about 765,000 customers weekly. It continued to locate most of its stores in suburban areas, and prided itself on its customer loyalty, derived from its "long standing commitment to providing a high level of customer service and convenience," according to company literature. In that year it was operating 82 retail supermarkets under the Piggly Wiggly name, all located within 175 miles of its distribution center in Vidalia. Stores ranged in size from about 13,000 to 47,000 square feet and averaged around 24,000 square feet. Forty-four of its stores were new or were extensively remodeled or enlarged in the 1980s.

However, the company underwent a restructuring that resulted from a 1986 ownership transfer to the PWS Holding Corporation. PWS acquired control in a managerial buy out scheme organized by Riordan Freeman & Spogli, a Los Angeles banking firm that had invested in other supermarket chains. Shortly after the transfer, new upper echelon managers took over the operation of the business, including, for example, James A. Bolanda, who replaced Frost as CEO and president.

Bruno's, Inc. then acquired Piggly Wiggly Southern in April 1988. At the time, the company's annual sales exceeded $571 million. The transaction brought 58 of the Piggly Wiggly Southern stores under Bruno's corporate umbrella. The price was 2.49 million shares of Bruno's common stock. Bruno's retained some key Piggly Wiggly personnel in middle management, but it replaced the top executives with personnel from its own corporate structure. It named Paul F. Garrison president, then replaced him with William J. White when Garrison was named president of Bruno's newly formed Birmingham division.

Bruno's acquisition of Piggly Wiggly Southern involved a contingent liability suit against PWS Holding, which had broken a lease agreement. In 1991, a judgment of $4.2 million in damages was awarded the plaintiff, reducing Bruno's second quarter profits by about $2.66 million. Through 1992, when Bruno's was still showing "no momentum" and the company was reeling from a risky joint venture with Kmart, the wisdom of its Piggly Wiggly investment was in doubt. However, since 1993, it has proved a lucrative transaction and was likely to remain a profitable part of Bruno's business for several years.

Principal Subsidiaries: Georgia Sales Co.

Piggly Wiggly Southern, Inc. History

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