Kroger changes logo at Ruler Foods

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Re: Kroger changes logo at Ruler Foods

Post by storewanderer »

I actually think there is quite a bit of expansion potential for this Ruler Foods concept. I am just not sure Kroger wants to mess with it. Small format is just not the same as large format as Wal Mart learned. ROI seems to be a challenge.

I think it could be used to compliment existing areas that Kroger operates in, where there is a low population density, skew toward more of a lower class (think those little settlements/remote areas where you see the random Dollar General or Family Dollar), and areas that simply cannot support a full conventional store, but can support more than they currently have.

Though maybe the "Dollar General Market" concept already has those bases covered.
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Re: Kroger changes logo at Ruler Foods

Post by Knight »

The Kroger Company's Jay C division, which includes Ruler Foods, has a problem being a division of approximately sixty-four stores. The Central Division has approximately 136 stores. Either the Jay C division increases store count by opening additional Jay C and Ruler Foods stores, or it is downgraded to a region in the Central Division.
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Re: Kroger changes logo at Ruler Foods

Post by pseudo3d »

storewanderer wrote: December 27th, 2017, 9:21 pm I actually think there is quite a bit of expansion potential for this Ruler Foods concept. I am just not sure Kroger wants to mess with it. Small format is just not the same as large format as Wal Mart learned. ROI seems to be a challenge.

I think it could be used to compliment existing areas that Kroger operates in, where there is a low population density, skew toward more of a lower class (think those little settlements/remote areas where you see the random Dollar General or Family Dollar), and areas that simply cannot support a full conventional store, but can support more than they currently have.

Though maybe the "Dollar General Market" concept already has those bases covered.
I do traveling sometimes (for often business-related purposes, for lack of a better term). In areas with about 1000 people in Texas (or less), where there's only a gas station or two as far as business goes, Dollar General has been expanding and has built stores there, where it provides basically an alternative to Walmart by providing food sales and some dry goods. Further up the chain is 5000-people areas where Wal-Mart and often Brookshire Bros. operate, and even in Supercenter areas there's usually a smaller grocery store with less than 20,000 square feet. Between the Houston and Dallas divisions of Kroger, they do not operate in smaller markets and those that do are legacy operations. While Kroger does operate stores in southeast Texas and far west Louisiana (like Lake Charles), outside of Houston's most direct suburbs, there is only the Huntsville store (recently rebuilt), the two remaining Bryan-College Station stores (one each), and in Dallas Division with two in Nacogdoches, one in Palestine, one in Henderson.

In more urban areas where Kroger, Aldi, and all the rest operate, Kroger will operate until it just isn't profitable to operate there anymore, and that niche will probably be filled by one more demographically suitable (Asian market, Fiesta, 99 Cents Only, etc.). So maybe Rvler Foods clearly isn't cut out for Texas, but what about closer to its home state? A lot of the Rvler Foods stores (which average 18,000 square feet according to Kroger Co.) are conversions from JayC, but JayC also operates very small supermarkets with most being already "small town" supermarkets with 30,000 to 40,000 square feet, and some going as low as 10,000 square feet. While Rvler Foods does have some rural stores that were probably cast-off JayC stores, Rvler Foods has had some success in St. Louis, where Kroger has invested heavily in over the last five years or so, but it is only a modest expansion of one market and most importantly it does not risk going up against Kroger's traditional stores. (There is one Lucky's Market in STL but it predates Kroger's "partnership")
Knight wrote: December 28th, 2017, 5:52 am The Kroger Company's Jay C division, which includes Ruler Foods, has a problem being a division of approximately sixty-four stores. The Central Division has approximately 136 stores. Either the Jay C division increases store count by opening additional Jay C and Ruler Foods stores, or it is downgraded to a region in the Central Division.
Probably. Under our noses, Kroger has actually eliminated a few divisions! Compare the two links below. While there was some press made about breaking up Southwest into Dallas and Houston, the Columbus Division and the separate City Market Inc. divisions have vanished.

https://web.archive.org/web/20150612162 ... divisions/
https://www.thekrogerco.com/contact-us/our-divisions/
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Re: Kroger changes logo at Ruler Foods

Post by Knight »

pseudo3d wrote: December 28th, 2017, 9:28 am Probably. Under our noses, Kroger has actually eliminated a few divisions! Compare the two links below. While there was some press made about breaking up Southwest into Dallas and Houston, the Columbus Division and the separate City Market Inc. divisions have vanished.

https://web.archive.org/web/20150612162 ... divisions/
https://www.thekrogerco.com/contact-us/our-divisions/
The Kroger Company's "Our Divisions" page has been updated. It is missing divisions such as the Columbus Division, Harris Teeter, and Roundy's.

City Market and King Soopers share the same location number: 90.
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Re: Kroger changes logo at Ruler Foods

Post by storewanderer »

City Market has not been its own division for many, many years. I think that change took place back in the early 00's. City Market was previously headquartered out in Grand Junction.

I think there is opportunity for Ruler in some of those 1,000 to 5,000 population towns that lack a Wal Mart or lack any grocer in general. I think they could use Ruler to supplement various Kroger divisions. The stores are quite simple to operate, have limited staffing, and limited hours of operation.
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Re: Kroger changes logo at Ruler Foods

Post by pseudo3d »

Knight wrote: December 28th, 2017, 7:22 pm
pseudo3d wrote: December 28th, 2017, 9:28 am Probably. Under our noses, Kroger has actually eliminated a few divisions! Compare the two links below. While there was some press made about breaking up Southwest into Dallas and Houston, the Columbus Division and the separate City Market Inc. divisions have vanished.

https://web.archive.org/web/20150612162 ... divisions/
https://www.thekrogerco.com/contact-us/our-divisions/
The Kroger Company's "Our Divisions" page has been updated. It is missing divisions such as the Columbus Division, Harris Teeter, and Roundy's.

City Market and King Soopers share the same location number: 90.
Officially, Roundy's and Harris Teeter are subsidiaries, not divisions. Either way, it doesn't account for the disappearance of Columbus Division though.
storewanderer wrote: December 28th, 2017, 10:15 pm City Market has not been its own division for many, many years. I think that change took place back in the early 00's. City Market was previously headquartered out in Grand Junction.
According to the 2015 division listing, City Market was STILL HQ'd out of Grand Junction.

storewanderer wrote: December 28th, 2017, 10:15 pm I think there is opportunity for Ruler in some of those 1,000 to 5,000 population towns that lack a Wal Mart or lack any grocer in general. I think they could use Ruler to supplement various Kroger divisions. The stores are quite simple to operate, have limited staffing, and limited hours of operation.
While Rvler (okay, Ruler, I think I made my point clear) Foods has expanded in St. Louis, Kroger seems more intent on keeping its markets intact in order to stay on top as well as upgrading and replacing stores with Marketplace stores (definitely a cross-division tactic), Kroger hasn't shown any interest chain-wide in planting stores in new markets (not since the 1980s at least), and I think that the failure of Walmart Express has scared off a lot of companies trying something like that, and even if they are cheap to operate the logistics are going to be a bigger drain on the company. If you look at the Kroger Fact Book you'll see that the "apple doesn't fall from the tree" with stores largely clustering around divisional headquarters in big cities, this is a big difference from Safeway/Albertsons, which has a pox that spreads throughout the West Coast and out in some really desolate parts of the country (like Alaska), and guess who runs a better, more efficient company (hint: not Albertsons). All of this is compounded by the fact that Dollar General (which already has long had stores in 5,000 people or less) is expanding into smaller and smaller markets.

Point being that expanding Ruler Foods is not in Kroger's DNA and would probably be a terrible mistake for everyone involved.
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Re: Kroger changes logo at Ruler Foods

Post by storewanderer »

Kroger does seem to skew less toward rural stores, but some divisions have a lot of rural stores that are very spread out (Smiths). Fred Meyer, Dillons, and City Market also have a number of rural stores. You're right though in that most of the divisions just don't have many... they phase out to zero outside the suburbs of large cities and off of interstate highways they simply don't exist.

We will see what happens. I think the sale of the convenience stores may be a factor that could make them look at expanding Ruler Foods into some markets. There are some rural markets where they went with larger convenience stores instead of a small grocery store. Remember, they have tried some large format c-stores (without much success) where the expanded space had a lot of Kroger brand items. They didn't sell them at a discount and they were generally getting those items from Coremark (high cost of item).
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Re: Kroger changes logo at Ruler Foods

Post by pseudo3d »

storewanderer wrote: December 29th, 2017, 8:25 am
We will see what happens. I think the sale of the convenience stores may be a factor that could make them look at expanding Ruler Foods into some markets. There are some rural markets where they went with larger convenience stores instead of a small grocery store. Remember, they have tried some large format c-stores (without much success) where the expanded space had a lot of Kroger brand items. They didn't sell them at a discount and they were generally getting those items from Coremark (high cost of item).
I would think the opposite. Kroger views the scattered stand-alone convenience stores as a distraction from its core business (food and drug stores) and I would imagine the logistics played a part in that. By converting the larger stores into Ruler Foods they eliminate the high-margin convenience store items and add lower-margin items in. It would also make those stores very hard to sell (the idea I imagine the stores are profitable to some degree). If it's on a major highway, then it could be made profitable by converting the excess space to a foodservice operation like Chester's, and if it isn't, Kroger should try to wash its hands of it and not wasting time converting it into a largely unproven format.

Either way, I believe a comparison was made to Lidl, but Lidl is operating on a different model where they were going after larger markets. The four known Texas stores (which now may never come to fruition) were facing competition. Pearland's had an H-E-B half a mile away. Bryan's had a Walmart right across the road. League City has Kroger Signature AND a large H-E-B half a mile away. (I couldn't find much information on where Conroe's was, seems Google Maps has trouble finding Conroe School Road).

While Kroger seems to have a number of Ruler Foods in some rural areas (the aforementioned "cast-off" JayC stores), I think that Kroger is finding Ruler Foods to be good in urban St. Louis, where they are able to expand, be profitable, and not compete against any of their flagship brands. If Kroger was to do something like take over Schnucks (unlikely but we're just talking theory here) that could change. I don't even think there are areas where JayC directly competes with Ruler Foods...
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Re: Kroger changes logo at Ruler Foods

Post by storewanderer »

Schnucks would be a great fit for Kroger. Their pricing may be a little bit of a problem.

Ruler Foods is a cheap way to enter a market. $2.5 million to develop a new store vs. $30 million (ouch) to develop a Fred Meyer.

As they say you have to spend money to make money but if you can get 12 Ruler Foods that do $125k a week in sales for the same investment as 1 Fred Meyer that probably does $1.5 million a week in sales it seems pretty close. But I am sure margins skew a lot higher in Fred Meyer so the company makes more money with that and that is probably where the ROI challenges come in.
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Re: Kroger changes logo at Ruler Foods

Post by wnetmacman »

storewanderer wrote: December 29th, 2017, 11:03 pm Schnucks would be a great fit for Kroger. Their pricing may be a little bit of a problem.

Ruler Foods is a cheap way to enter a market. $2.5 million to develop a new store vs. $30 million (ouch) to develop a Fred Meyer.

As they say you have to spend money to make money but if you can get 12 Ruler Foods that do $125k a week in sales for the same investment as 1 Fred Meyer that probably does $1.5 million a week in sales it seems pretty close. But I am sure margins skew a lot higher in Fred Meyer so the company makes more money with that and that is probably where the ROI challenges come in.
And while we're talking simple economics....

If I'm selling an item that costs me 49 cents for, say 99 cents in my flagship stores (Kroger, FM, etc.), I will sell a certain number of items per week. But say in Ruler, I sell the same item for 69 cents. I will most likely sell three times more there, so while the margin is lower, the overall profit is indeed higher. (50 for one versus 60 for 3). And labor isn't as huge in a smaller store, so it averages out. I think Ruler is a great way to sneak back into places where you once were.

For me, if the prices are better, you could put up a sign that said Turd Foods, and if I can get good food cheap, I'll shop there. In the areas where they're targeting, unemployment is high. When prices are low, that wins over personal preferences any day of the week.
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