Dive Brief:
- Central Grocers filed for Chapter 11 bankruptcy on Thursday, according to The Shelby Report. The development came a day after a group of food and beverage product suppliers petitioned the court to bring a Chapter 7 bankruptcy case against grocery supplier Central Grocers, according to Supermarket News.
- The company said it will use the court-supervised process to sell its Strack & Van Til stores and its distribution center in Joliet, IL. It intends to continue operating its stores throughout the process.
- The supplier group that petitioned the court, led by industry bigwigs Coca-Cola, General Mills, Post Consumer Brands and Mars, wanted to force liquidation of the troubled distributor. They said that combined, they were owed $1.8 million in trade debts from Central, with General Mills connected to the largest outstanding bill — amounting to $1.1 million.
Dive Insight:
It's rare that a group of major food and beverage companies team up to try and force a bankruptcy, but the struggles of Central Grocers' company Strack & Van Til make this action seem fairly necessary. And with its voluntary filing for bankruptcy, the company itself agreed.
"In light of the increasingly difficult environment for independent supermarkets and retailers, we have been working tirelessly to achieve an outcome that is in the best interests of our stakeholders," Central Grocers President and CEO said in The Shelby Report.
In April, the retailer announced it would sell 22 Strack & Van Til stores and would close nine Ultra Foods locations in an effort to get financially back on track, but those moves weren’t nearly enough to get the company out of the red.
Central Grocers' corporate woes come at a time that many retailers are fighting to survive. The grocery retail landscape has changed dramatically in the last few years, with e-commerce giants like Amazon encroaching on a space that was once brick-and-mortar exclusive. Consumer demand for both high-end grocery experiences and hyper-convenient shopping experiences have also put pressure on retailers to make hefty investments in store remodels and in-store tech.
Some retailers have risen to this challenge, while others have only declined faster. Last year, Fairway filed for bankruptcy, and Marsh Supermarkets may be doomed to the same fate. Still, Fairway's decision wasn't a forced move, but rather a strategic play by its owners to regroup and try and right the ship.
