Sunday, January 4, 2015

More Kroger Florida Developments


     The official announcement of Kroger coming to Florida may be getting closer than everybody thought as we kick off the New Year on The Albertsons Florida Blog. According to the Florida Business Observer, a Tampa based business newspaper, Kroger has been looking at potential store sites north of Tampa and in the Fort Myers area. This news comes from a commercial real estate broker who has been working with Kroger recently. Last March, Kroger made a public announcement that they were in the works to enter a new market they currently don't have a presence in, which could only be three possible regions in the nation: The Northeast (which is already highly competitive and over-saturated with grocery chains), The Upper Midwest (The Dakotas, Minnesota, and Wisconsin) or Florida. Over the past few years, Kroger has dropped some hints that Florida would be the most likely region out of those three that they would want to enter. First of all, Kroger is building a brand new, state of the art distribution center in Georgia to service their Southeast and Delta Region stores, which would be perfect to handle a Florida expansion. Not only that, but Kroger has tried to buy Winn-Dixie twice (in 2000 and 2005), with both buyouts unsuccessfully going though. I don't think Kroger ever wanted to leave Florida the first time back in the late 80's, however the supermarket industry in Florida was so overcrowded back then, it just wasn't worth it for Kroger at the time. Now with everything weeded out, Kroger could possibly compete successfully with Publix, who they already coexist with in the highly competitive Atlanta market. Publix currently has a 43% market share of the Florida supermarket industry, with Walmart in second place with 29%, and Winn-Dixie at 14%, according to the Motley Fool (who has a very good article about Florida's polarized supermarket industry and the fall of the middle of the road chains if you follow the link). If Kroger enters Florida, that could really shake things up. Publix is very protective of their home turf in Florida, and they are currently fighting a war with Walmart. While it would take a lot to dethrone Publix from the top, modern Kroger stores have a Publix like shopping atmosphere that will probably go over well with Florida shoppers, and will bring some much needed competition to the Sunshine State, something we've been lacking with the recent fall of stores like Albertsons, Food Lion, and Sweetbay. And most importantly, Kroger will fight with Publix, unlike those other chains have.  

     As usual, Kroger is keeping quiet about any official announcements that they may be coming to Florida soon, and they aren't responding to anyone's questions or comments about the topic. I also discovered this ad on Facebook left by a Realtor looking for investors in Publix and Kroger anchored shopping centers in the Tampa area. I'm pretty sure Kroger is coming to Florida, and all of you Kroger fans out on the West Coast of the state may not have to wait much longer to shop there. I'll keep everyone posted if I find out any more about Kroger's possible expansion into Florida.

So until next time,
The Albertsons Florida Blogger

10 comments:

  1. The Florida market needs competition. Publix suffers from somewhat high prices with uneven stores, Winn Dixie sucks (sorry--the prices are still high and the stores aren't very good), Walmart is Walmart, but I hope that a Kroger return wouldn't mean the end of Albertsons.

    One problem is Albertsons LLC seems like such a loose cannon--from the get-go they cut 100 stores, which pulled them out of the Austin, TX market...then in early 2007 they abandon Northern California entirely...then they go acquire some Raleys locations in NM later that year...then they sell a bunch of stores to Publix in 2008 while shedding even more stores in places like Texas...then they shed even more stores but leave just four in a market in a market that once had around 100 at its peak...then they buy up the SuperValu stores but get rid of the Florida division in the process (combining it into the new South division in Dallas-Fort Worth, almost 1000 miles away), then buy United Supermarkets in north Texas to indicate that they're not giving up on Texas and want to fight H-E-B when it inevitably comes north, and then buys Safeway in a bid to become the second largest grocery chain behind Kroger, and announced that they wouldn't be giving up any stores (at least in Texas).

    The question is, when will Kroger come to Florida? Apparently, H-E-B owns several pads in Dallas (including, reportedly, a former Albertsons) but isn't springing yet because they don't have the distribution system to effectively service the area, so I'm hearing maybe 2017 at the earliest, which would give Albertsons/Safeway in Dallas and points north time to shore up, because once they start to get well-organized, it will make it more difficult for a competitor to gain entry.

    With the merger about to close, it gives Albertsons/Safeway an incredible scope of markets, with a solid grip on the West Coast (plus the San Francisco market), stores in Alaska and Hawaii, a strong hold on Washington DC, Chicago, and a few others. Unfortunately, Florida isn't one, and a Kroger invasion could easily wipe Albertsons off the map.

    I'm not saying the four stores will close, but as they say, "do or die". If the stores are renovated and a few more (re)open (like in Louisiana, which was also part of the South division), possibly in old stores Winn-Dixie/Sweetbay left behind, it will give them a fighting chance in what could turn out to be the new grocery wars.

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    1. I think the return of Kroger could actually help Albertsons. If Kroger can pull this off with 5-10 stores at first in the Tampa area, it might allow Albertsons to try opening some new Florida stores once again after they see a chain successfully compete with Publix and take some of their market share, something that hasn't been done since the 90's when Albertsons was #3 in Florida. A 43% market share is huge and shows lack of competition. In most areas (especially highly competitive ones like Atlanta and Dallas/Fort Worth), the top chain is lucky to get a market share in the high 20% range. Publix and Kroger are already battling it out in Atlanta successfully (although Publix recently stole the title of #1 supermarket chain in Atlanta from Kroger). One thing I keep reading is that most supermarket chains are too afraid to enter Florida because of Publix and their loyal following. By letting Kroger beat Publix down a bit, it can open the door to other chains too afraid or previously badly beaten by Publix (like Albertsons - who still has a small foothold here with those 4 stores) to start expanding again, reopening the Florida market to competition. There has to be a reason why Albertsons left 4 stores so far away from the rest of the chain. They probably want to expand again in Florida, but they're just waiting for the right moment, because they could have gotten out of here back in 2012 when they closed those other 13 stores, and never had to spend another penny in this state again. Actually, out of those 13 stores, about half still sit empty, and I believe Albertsons is holding the lease on at least one (their once very profitable St. Lucie West store, which I know Albertsons still has 6 years left on their lease there). Safeway is the one national or formerly national supermarket chain that has never tried running a Florida division at some time, so they've never had to try going against Publix like Albertsons did for years.

      Apparently, Albertsons and Safeway are divesting 168 stores, 111 of which are Albertsons owned. 4 Tom Thumb and 8 Albertsons Texas stores in the Dallas/Fort Worth area will be sold to Associated Wholesale Grocers, who will then sell the stores to Minyards (you can see the list of effected stores on Minyard's homepage).

      If Kroger is already looking at potential sites, I'd say it's possible to see the first new Kroger Florida stores by 2017-2018 (or maybe by 2016 if they use some existing buildings or make an official announcement by this spring). They're probably trying to secure enough sites before Publix starts trying to buy property just so Kroger can't have it. The new Kroger Southeastern Region distribution center in Atlanta is supposed to open in Fall of 2015, so one that's up and running, they'll have a distribution network set up that can easily serve new Florida stores.

      Like I said before, Albertsons has some kind of plan with keeping those 4 Florida stores, especially since they've lasted 3 years now on their own (at first even I didn't think those 4 stores would make it another year after the closing of the other 13). Every other chain completely left the state or got bought out, but Albertsons left 4 stores. From what I've heard, Albertsons hasn't done much along the lines of remodeling to any of them. The Clearwater store does have an updated paint scheme inside of it's old Blue and Gray interior, but I'm not sure if that was done in the last few years or ten years ago. That store also got some new brown tri-sided aisle markers I've never seen before as well, but I think that's the extent of Albertsons investment in Florida in recent years. Albertsons still has some time to prepare for a Kroger invasion. Or maybe they'll just sell those 4 stores to Kroger (which was rumored at first during the 2012 closings, and those 4 stores are all in prime locations). I guess we'll just wait and see. Albertsons seems to be full of surprises recently.

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  2. You're right, we don't know what Albertsons wants in Florida. Unlike the troubled Texas Randalls stores, which still have a pretty solid grip in the grocery market along with a distribution center, Albertsons Florida doesn't have a lot going for it.


    The fact that Albertsons in Florida wasn't done away with a few years ago means something, and since Albertsons clearly has some deep pockets, I wouldn't be too surprised if they wanted to snap up some weaker competitors or start growing again. But they could be just as well holding out those markets so they can sell them to Kroger when the time is right. But they haven't been selling out to competitors in recent years, and the divestments were done because the combined Safeway/Albertsons in some markets (even Texas) were required by the government.

    Albertsons has definitely invested in the Louisiana stores, part of the South division (and once of the Houston division) but that's the extent of it. Like H-E-B in Dallas, the Kroger in Florida plan will take time, giving Albertsons time to mobilize, though unlike Dallas/Fort Worth, they don't have the store base for it. In October, Winn-Dixie closed several stores across Florida, for all we know, Albertsons might have already purchased at least a few locations, and will reopen them.

    If things work out the way I think it will, Publix will take a hit as a four-way battle royale will take place as the groceries try to compete with Walmart: Publix, Kroger, Albertsons, and Winn-Dixie. If anything, I think Winn-Dixie has the most to lose from Kroger--WD's gotten a reputation working against them as both with a high price and being pretty rinky-dink anyway, and they can't match Kroger's price, or Publix's service. And if things get sticky, Albertsons (and its deep pockets) can retreat to its better markets, but Winn-Dixie cannot. So assuming Kroger does enter Florida, one of two things will happen: Albertsons fights the good fight and can secure a close #3 or maybe even a #2 if they play their cards right (or not play cards at all--one of the things Albertsons has an advantage of is card-free shopping), with Winn-Dixie settling for #4 and possibly going under, or Albertsons pulling out, and Winn-Dixie getting a distant third place. A third scenario is that Kroger will pull an Albertsons-in-Houston and leave the market, as a result of a revived Winn-Dixie and Albertsons. That's the ONLY scenario where Winn-Dixie isn't completely screwed.

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    1. I could see Albertsons buying up a few old Winn-Dixies/Sweetbays, just to hold on to them until the time is right to open them as Albertsons. That new Albertsons in Denham Springs, LA was also a former Winn-Dixie, so Albertsons has done it before. The only thing is that Albertsons isn't opening many new stores anymore, but instead they've been focusing on acquisitions over the last few years as a way to increase their store count. Maybe Albertsons should try to buy Winn-Dixie - that could really get them a firm grasp on Florida for when Kroger comes, while strengthening their Louisiana base as well. Albertsons is also really good at weeding out their acquisition's small, old, and outdated stores, and remodeling and replacing them with more modern stores (something Winn-Dixie really needs right now). That store in Denham Springs is the last new Albertsons I know of, and that was 3 years ago. Winn-Dixie's problem is that they don't have much money to work with. That's why their recovery has been so slow, and why their store remodels to their new prototype have been only about 5 per year recently (the recently remodeled WD stores are actually pretty interesting, and I've been wanting to feature one here as a bonus store). Whatever money they had they used to buy Sweetbay, and that was just their way to keep Publix from grabbing any of those stores and crushing them again. Winn-Dixie is in a better place than they were ten years ago, but it's still not a very good place. Somebody (like Kroger, or Albertsons if they tried) could easily finish Winn-Dixie off through rapid expansion. Like I said in the article, Kroger tried to buy Winn-Dixie twice. I agree with the fact that Albertsons wouldn't have much to lose by expanding in Florida again to go against Kroger (who they already compete with in practically every other market they operate in). Albertsons clearly wants to to something in Florida, but just what they want is a mystery right now.

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  3. you guys know Kroger is already in Florida with the Harris teeter Banner

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    1. I realize that. That one Harris Teeter store in Fernandina Beach is considered Kroger's stepping stone into Florida, and what started most of this Kroger Florida frenzy. What I'm talking about in this post is a complete push by Kroger under the Kroger name into various regions of the state. If and when Kroger does push further into the state, I doubt they'll use the Harris Teeter name, or at least it would be a bad decision to. The Harris Teeter name has practically no recognition outside of Nassau County, and using that name will probably result in similar results to when Kroger tried to use the name 'Florida Choice' back in the 80's on their stores.

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  4. I wouldn't be surprised if the last Harris Teeter remodels into a Kroger store. In either case, one of the things that Albertsons South announced recently was the closing of a store--but not in Florida. It was the Mandeville store, which opened around 2009 as one of the first new Albertsons LLC stores. Given that the store was leased and not built by Albertsons, and the Whole Foods rumor was almost immediately confirmed days after the announcement of Albertsons' closure, it sounded like the landlord had made a deal with Whole Foods under the table and jacked up the rent so Albertsons would take off.

    I also think I remember reading that when they pulled out of San Antonio, they basically forbid the stores from being grocery stores again. That sounds like a bid to come back eventually when there's better times. I'd love to see a reinvigorated Randalls (they'd almost certainly use Randalls there) come back to the area. H-E-B has been remodeling stores and whatnot, but they've left a great number of "Pantry" stores from the early 1990s, often stores from an earlier generation, with no pharmacies...and around 2008 or so, they decided to rebrand them as H-E-B, which creates massive differentiation between stores, so one could be a tiny 25k square foot affair with no pharmacy and one could be an upscale 80k square foot store, and they're both branded as the same thing.

    Randalls and Albertsons at least have standards set out to prevent slippage like that.

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    1. I think the best thing to do would be convert that last Harris Teeter Florida store into a Kroger if and when the big Kroger push ever does come. Harris Teeter actually tried an expansion into Jacksonville in the late 90's (which, like most supermarket expansions into Florida, ended miserably, with Publix driving them out), and that Fernandina Beach store has been the last holdout. The lone Harris Teeter store remaining in Georgia after their huge failure in Atlanta (on St. Simons Island north of Brunswick) should probably switch to the Kroger name too, since Kroger has a strong presence in Georgia as well, especially in nearby Savannah, saving the Harris Teeter name for their core markets in the Carolinas and Virginia.

      It's sad to hear of the new(ish) Mandeville Albertsons closing, especially since it was only one of a handful of new stores Albertsons has opened in recent years, when it seems like all they want to do is close stores. 3 of the 4 Albertsons Florida stores are actually owned by Albertsons (Clearwater, Altamonte Springs, and Oakland Park), so there's no landlord that can push those stores out. The last round of Albertsons Florida closings eliminated every leased store the chain had left, except for the Largo Mall store, which is very large (70,000 sqft) and does killer business from what I've heard. Many of the recently closed Albertsons Florida stores have become re-purposed as other grocery stores, especially Walmart Neighborhood Markets, with a few others going to smaller Hispanic oriented chains, so Albertsons hasn't put any restrictions on store reuse down here. It'll be interesting to see how the next few years play out with the Albertsons South division and a looming Kroger Florida expansion. I hope the closing of the Mandeville store doesn't hinder any hopes for Albertsons to open any new stores in Texas, Louisiana, or Florida.

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    2. Unfortunately, with a few exceptions of Safeway in Hawaii and some new Jewel Oscos replacing Dominick's in Chicago, there's little growth in new stores in the combined company (Acme has been on the decline, and the other NAI divisions suffered under SuperValu). An Albertsons Market (United division) will open on January 28th in New Mexico (built from the ground up, no less). Given that Baton Rouge is one of the stronger Albertsons South markets, I wouldn't worry about it too much. There's also rumors that Winn-Dixie will pull out of Louisiana, and if that's the case, then they could start bulking up west of Baton Rouge and possibly switch to the Randalls distribution center for goods.

      There will probably be more store closures here and there, but it will be worth it if AB Acquisition can hold down the markets it has while improving the divisions. On a personal note, I feel that in many ways Albertsons South is already redundant, because of overlap: the Houston division operates Tom Thumb in Dallas (so does United, but that's beside the point), and all the other Albertsons stores in South are closer to Houston than the South's division is. One way to ensure that employees keep their jobs is that since there's a Houston division again (since the Albertsons LA stores were originally Houston), is for all the South stores NOT in Dallas (that is, Louisiana and Florida) to go to Houston's division, with the South division reverting to Dallas-Fort Worth and taking over the Tom Thumb stores as well, in effect, swapping stores.

      In any case, I imagine that in 2015, the company will probably be weeding out bad Safeway stores while lowering prices and reorganizing, and I DO think that South will open some stores.

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    3. When Kroger left San Antonio another grocery chain took up the leases on all the metro stores, so there was no restriction on the leases concerning grocery stores. Those stores did not last long.

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