Is the Kroger Company in position for an acquisition in 2017?

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CPhT_Smith
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Re: Is the Kroger Company in position for an acquisition in 2017?

Post by CPhT_Smith » March 12th, 2018, 12:49 am

Kroger needs to focus on what it does best. Running a supermarket that’s has a right mix of price and quality. With some differentiation between markets, divisions and stores to account for the clientele. There are a lot of technological changes happening, but right now the stock markets are overhyping Amazon. I’m not saying Kroger has some adapting to do. However, online will never replace a brick and mortar store for groceries. People like to see, feel, smell and touch the food they are buying. People tend to be more loyal to a particular supermarket chain than any other retailer. We still don’t know what the result of the Amazon Whole Foods combo will be... it might be a failure.

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Re: Is the Kroger Company in position for an acquisition in 2017?

Post by arizonaguy » March 23rd, 2018, 7:48 am

The new rumor seems to be a Kroger / Target combination (although sources say that there is no truth to the rumor).

http://www.stltoday.com/business/local/ ... ail-latest

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Re: Is the Kroger Company in position for an acquisition in 2017?

Post by pseudo3d » March 23rd, 2018, 8:14 pm

arizonaguy wrote:
March 23rd, 2018, 7:48 am
The new rumor seems to be a Kroger / Target combination (although sources say that there is no truth to the rumor).

http://www.stltoday.com/business/local/ ... ail-latest
It's times like this when I wish I could be a retail analyst and get paid for pulling things out of my--but really, Target and Kroger would rather do things their own way. Target getting in bed with CVS in regards to their pharmacy seems to bode poorly for any partnership with a food & drug retailer, and in markets where both compete with food and general merchandise stores (albeit different mixes) doesn't look good either. It doesn't make sense anyway. The big problem with Target's grocery selection (besides being generally overpriced with its pathetic produce section) is that it's super-abbreviated, and while Kroger could perhaps bring lower prices, it isn't much benefit to me to me as a shopper (not enough to do full grocery trips) and even less benefit to Kroger. On the Target side of things, Target's general merchandise isn't worth getting excited over. They did have a decent card table that Walmart didn't have, but again, Kroger has Fred Meyer, even if they are in a hurry to make it less and less like a full "hypermarket" with every passing season.

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Re: Is the Kroger Company in position for an acquisition in 2017?

Post by storewanderer » March 24th, 2018, 12:04 am

That would be a very unfortunate combination. I highly doubt it will happen.

I think Kroger will stay on its own.

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Re: Is the Kroger Company in position for an acquisition in 2017?

Post by CPhT_Smith » March 24th, 2018, 1:34 am

A few reasons a Kroger-Target Merger wouldn’t work. Corporate cultures and management and employee relations that are the difference between night and day.
If the merger would happen today it would be Target aquiring Kroger because right now Wall Street has Kroger stock under valued. Kroger is the bigger of the 2 companies based on revenues, volume, store count, and employees. Right now Target’s market capitalization is larger than Kroger. If this was a year to 18 months ago KR stock wasn’t being underpriced by Wall Street and Kroger would have had Target beat there as well.
Kroger’s workforce is 80-90% unionized and Kroger has historically maintained good relationships between the company and the Unions. The last time there was a issue between Kroger and the Unions was during the 2004-2005 California strikes and walkouts that also effected old Albertsons and Safeway. Kroger is known as being one of the best in the industry for total employee comphesation, that includes wages and benefits, in all of their markets.
Target on the other hand is equally opposed to unions as Walmart, and if there was a merger with Target being the aquiring company they would suddenly be adding stores coast to coast that have CBA that they would still have to honor. Target has made it clear they don’t want to deal with Unions. This would also cause problems at the current Target stores because employees at those stores will resent being paid less and having less valuable benefits than other employees in the same city doing the same job for the same company.
Kroger still is strong in Pharmacy. What would happen with the CVS deal giving them exclusive rights to Targets Pharmacies? Lastly Kroger still has a somewhat decentralized structure. Yes many things are standardized, but there’s still a lot of decisions that are made at the division level to allow for chains like Fry’s, Ralph’s, Smith’s, King Soopers, Fred Meyer, etc to adapt to be competitive in their markets. While everything in Target is centralized from Minneapolis. The hubris from Target headquarters in Minneapolis is one of the reasons their expansion to Canada didn’t work. It looks like both companies have strategies to adapt to a changing retail environment. The problem is Wall Street is putting too much in to the Amazon bubble. Also both companies probably have more things in the pipeline, but instead of just putting them out before all of the bugs are worked out to please impatient Wall Street analysts they are quietly making sure they have it right for their customers before unleashing it on them.

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Re: Is the Kroger Company in position for an acquisition in 2017?

Post by storewanderer » March 24th, 2018, 10:49 pm

I am afraid listening too much to Wall Street will be the death of a lot of these retailers. Wall Street is pushing these companies into unprofitable ratholes and causing them to focus on things that most customers don't care about.

Kroger needs to get back to basics and do what is right for its customers and then for its employees. The successful years of Kroger in the late 00's and early 10's under Dillion showed that focus. Dillon even used to say the company was being run more like a private company. Do the right things for the customers and the employees and the good numbers will follow and Wall Street will not hassle you (though they may not reward you either... which I guess is the problem).

The Kroger and Target culture thing is definitely a big issue. Very different cultures. Very different customer bases. I suppose the two could merge but I don't really know how it would end. Very different go-to-market strategies from the two companies.

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