Friday, November 13, 2015

Kroger's Latest Acquisition Will Bring them to...Wisconsin

     Yes, this doesn't directly relate to Florida, but let me explain...

     Remember all of that hype earlier this year that Kroger was looking into making another acquisition after the dust from the Harris Teeter sale settled down? Supposedly Kroger was looking to make an acquisition in a market where they currently did not have a presence, which made most of the media outlets point their fingers at Florida and a possible acquisition of Winn-Dixie by Kroger. Well, the other day the news broke about what that possible acquisition was going to be: Roundy's Supermarkets based out of Milwaukee, Wisconsin. The upper midwest is one of the three major markets where Kroger doesn't have much of a presence, in addition to Florida and the Northeast. Roundy's is actually a company that operates supermarkets under the names Pick n' Save, Copps, Metro Market, and Mariano's in most of the major cities in Wisconsin and also the Chicago area. I have heard that Kroger was looking to bulk up their Chicago presence, and this acquisition is much closer to home for them than a Florida acquisition. The most interesting part is that Roundy's isn't exactly in the greatest financial shape. Kroger has always said that they like purchasing chains that are in good financial health, as they aren't in the market to turn around struggling stores (like would be the case with Winn-Dixie). It was a shocker to many that Kroger chose to do this, although speculation is that Kroger is only going into this deal for some of the prime Chicago real estate Roundy's has, along with making them the #1 supermarket chain in Milwaukee. Winn-Dixie is technically the #3 supermarket in Florida (behind Publix and Walmart), but they have lots of hard to get real estate, especially in the more urban areas of Florida, which could attract a potential buyer. 

      So, if you were one of those people looking forward to Kroger coming back to Florida, it looks like the wait may be even longer if they do choose to come back to the Sunshine State. But after some of the events of the past year, I could very well believe now that Albertsons could be a serious potential candidate at buying Winn-Dixie if they choose to sell out to someone. However, I feel that Kroger is strong enough to try a natural Florida expansion by building their own stores if they wanted to, something that I don't think Albertsons wouldn't be able to pull off again at this point.  

     That's probably enough rambling for now. If you want to read more about this new Kroger acquisition, the Cincinnati Business Courier has a really nice article about the topic which you can read here.

More Albertsons coming soon. So until the next time,

The Albertsons Florida Blogger

17 comments:

  1. Ah yes...I was going to reply to RetailWatchers (which my membership is still pending) but Mariano's in Chicagoland, for lack of a better term, is ruined. I saw what happened when Kroger converted Hiller's Markets in Michigan earlier this year, and I believe that what will happen to Mariano's will be basically a Dominick's-to-Safeway 2.0. Expect to say goodbye to Roundy's brands and merchandising, unless Kroger basically treats Roundy's as to what United is to Albertsons.

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    1. I'm not sure what exactly Kroger has planned for these stores, but I feel that the most likely thing is that they'll all eventually become cookie-cutter Krogers, whether the names are kept or if all the stores are switched over to the Kroger name. I'm not too familiar with Mariano's, but I believe they're a newer chain (founded in the last decade or so), and their stores are supposed to be very upscale and nice. It looks like Kroger seems to let Harris Teeter do their own thing, as I believe their newest stores use a unique exterior design and decor that Kroger doesn't use, unless these are just holdovers from before Kroger finalized their deal to buy HT. Even with that being said, I still believe this may be the end of Roundy's as everyone knows it, as Kroger is probably going to try some kind of rebranding effort to bring this new division back into financial health.

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  2. How coincidental, I was just talking to another flickr member the other day who said Kroger doesn't have a presence in Chicago. Guess that's about to change soon...

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    1. Yes, that will change quite a bit! Mariano's has a pretty sizable presence in Chicago, with somewhere around 40 or so stores in that general area, and they were planning on opening more.

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    2. Kroger does have a presence in the Chicago area, but they're not traditional format stores. All the Kroger owned stores in Chicago area (14 in total) are part of the Food4Less Chicago division.

      There are 48 other stores in the state of Illinois, concentrated both South and West of Chicago. These 48 stores in Illinois are served by both the JayC division and the Central division, both based out of Indiana.

      About 90 Miles from Chicago, in Rockford, Kroger had sold Hilander, a relatively small banner to Schnucks a few years back.

      Back to the topic at hand, Anything could be possible but I wouldn't put all my bets on the people of Cincinnati completely krogerizing the chain. For the most part, they left Harris Teeter in tact (I live in an area with both Kroger and Harris Teeter, and the latter is the most upscale of the two) but then again, we may never know with Kroger.


      Now this is based off anecdotes and assumptions I had but personally, I thought Kroger's next acquisition would be of another Midwestern chain, out of a state where they don't have much market presence. Not Bi-Lo or Roundy's.


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    3. Mariano's is supposed to be an upscale chain, so now Kroger will have a presence in Chicago's discount and upscale grocery markets, getting a piece of both worlds. I know that there was lots of rumor online that Kroger wanted a much larger presence in Chicago, as in something more than just the Food4Less stores. I haven't found anything about what Kroger's future plans are for Roundy's banners, but it will be something to watch.

      I'm surprised at the amount of freedom Kroger has given to Harris Teeter. HT still seems to be operating their stores like Kroger never even bought them, and they still use their own store designs and Harris Teeter brand items, rather than Kroger brand (at least according to HT's website). I've never been to Harris Teeter in person to notice if the Kroger influence is actually much larger than it seems.

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  3. I wouldn't be surprised if Kroger does eventually try to open up shop in the northeast. If they decide to open up shop in the Twin Tiers area, I'd bet Tops would be a candidate for acquisition. Though I bet some of Tops' newer stores would be too small for the typical Kroger. I've got some pictures of a few different Tops locations (as well as two Wegmans locations) to be uploaded to Flickr/blog posts from my picture vault. Yep, I've officially starting taking pictures of grocery stores now too.... :D

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    1. Tops would be a good candidate for Kroger if they every did want to enter the Northeast. Kroger isn't too picky about store sizes of their acquisitions, and over time they would more than likely expand/replace any stores they feel are too small. I always thought the current Ahold stores (Giant-PA, Giant-MD, and Stop and Shop) would have been a good acquisition for Kroger as well for a potential Northeastern expansion, although now Ahold decided to merge with Delhaize rather than just put themselves up for sale to anyone, like Safeway did (who Kroger put in a bid for before Albertsons got them). I guess now I can officially welcome you to the supermarket club!

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  4. Ironically, Tops used to be a part of Ahold too. Thanks for the welcoming.

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  5. Kroger's acquisition of Roundy's give it entry into Wisconsin and increased presence in Illinois. It is a good move around the Great Lakes states.

    The acquisitions of Harris Teeter and Roundy's has me thinking if Kroger seeks regional chains with good store count, position in markets, and good management.

    My questions for Kroger:
    (1) How can Kroger grow?

    Kroger will continue to grow through the acquisition of regional chains and will expand its Marketplace hypermarket stores to compete against Walmart's Supercenter stores.

    (2) Where can Kroger grow?

    Kroger can grow anywhere it sees opportunities.

    Both northeastern and southeastern United States provide opportunities for growth. Both general regions are undergoing shifts in the number of participants and who is participating.

    Participants in the northeastern United States have gained opportunities as A&P folded. Albertson's (Acme, Jewel, Safeway), Ahold Delhaize (Hannaford, Stop & Shop), and ShopRite should be dominant in 2016.

    The southeastern United States are dominated by Walmart and Publix, Kroger's major regional competitors. Food City and Ingles are smaller regional chains that are dominant in specific regions in North Carolina, South Carolina and Tennessee. Southeastern Grocers (Bi-Lo, Harvey's and Winn Dixie) and Food Lion are chains that have closed stores and exited markets.

    With Publix's further expansion in North Carolina and Tennessee, I wonder if Ingles could be an acquisition target. It has become very active in new store construction (replacement stores, expansions, additional stores).

    Florida remains an opportunity for expansion. Winn-Dixie could be an acquisition target and provide some stores. I think Kroger's Marketplace stores could outdo Winn-Dixie and compete against Walmart and Kroger.

    (3) Is Kroger still in position to make additional acquisitions?

    I think Kroger is focused on integrating Roundy's at the moment. When the process completes itself and Kroger has conditions and funds for growth available, it could make another acquisition.

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  6. http://www.ncflindependent.com/2015/09/22/harris-teeter-grocery-store-plans-major-expansion/

    Seems like Albertsons isn't the only one remodeling in Florida.

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  7. And the rumor train keeps on rolling.

    http://www.cincinnati.com/story/money/2016/02/11/report-kroger-might-buy-fresh-market/80240816/

    I don't think that Kroger will end up acquiring these stores in the end (I think a Private Equity firm might get it), but if they do; They'll end up with an increased presence in Florida.

    This honestly seems like another "Publix buying Whole Foods" scenario.

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    1. I didn't know The Fresh Market was having troubles like that. They seemed to be doing pretty decent, and they've been opening a bunch of new stores around here recently that seem to get a decent following. I have to agree that a private equity firm will probably end up purchasing The Fresh Market. Not that Kroger would do a bad job running the company, but the private equity firm seems like a better match for them right now. The Publix buying Whole Foods rumors were a fairly interesting concept. Publix has never bought out another company in their entire history, let alone even considering buying one with locations all around the US.

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    2. As speculated, a private equity firm ended up buying The Fresh Market.

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    3. It was probably a bit of a stretch for Kroger to go after The Fresh Market anyway.

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  8. One One One One Zero (11110)April 2, 2016 at 7:30 PM

    http://www.prnewswire.com/news-releases/kroger--luckys-market-announce-strategic-partnership-300244806.html

    And in other Kroger news...

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    1. That's an interesting move on Kroger's part. Lucky's has been on a recent push into Florida, including a new store in my area to open later this year. For a company as young as Lucky's, a partnership with Kroger makes a lot of sense as far as product and distribution benefits, and buying power (depending on what kind of agreements they made). It also makes me wonder if Kroger will be looking into taking over Lucky's as a wholly-owned brand one day, especially after their recent interest in The Fresh Market.

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