Kroger takes partnership with "Lucky's Market"

[pseudo3d]

Albertsons/Safeway has closed several stores out west (both pre and post merger) and really the only new stores have been some replacement Safeway stores.
Kroger has all but exited Northern California (except for Foods Co) and isn't opening new stores.
WinCo has focused its expansion on Arizona, Oklahoma, and Texas.
Walmart's non express store closures disproportionately affected California.
Haggen was completely killed in California.
Fresh and Easy was completely killed in California.

Kroger's situation in California has seen Ralphs stores slough off in the last 10+ years. Back in the early 2000s, Ralphs (along with Cala/Bell and Food 4 Less) numbered 400, and even between 2012 and 2013, it lost 9 stores (source), more than any other division (the only areas that had gains were areas where Harris Teeter were. It's also the only area I know of (with Kroger's pre-Mariano's/Harris Teeter acquisitons) that DOES NOT have a full-line "Marketplace" thing going on.

While Kroger HAS been known to pull out of areas before (most of Louisiana in the mid-1980s, San Antonio in the early 1990s), I don't think it's realistic to expect Kroger to pull out of California any time soon. I can see them at most spinning Ralphs off as an independent with a 30% interest share and an option to buy back the company.

I believe that no one is expanding in California all for different reasons. Haggen SW and Fresh & Easy were already doomed ideas to begin with, Kroger doesn't tend to expand their stores like other chains and Albertsons/Safeway is simultaneously holding back from expanding by digesting stores and their attempts at expansion have met disastrous ends.

Besides, remember that Kroger IS an East Coast company, so it shouldn't be TOO surprising to see them put the West Coast divisions on the back burner for a bit.

[Knight]

Three possibilities of Kroger further expanding into Florida:
1. Expand the Kroger banner into Florida with Kroger and Kroger Marketplace stores. NOT LIKELY
2. Expand the Harris Teeter banner across Florida.MORE LIKELY ON A SMALL SCALE
3. Acquire Winn-Dixie.NOT LIKELY

I wouldn't discount the notion of investing in a specialty retailer as the vehicle for expanding in Florida, however. The new Luckys Market stores being built are being funded by Kroger's investment.

Opening Kroger, Kroger Marketplace, and Harris Teeter stores organically will obviously require significant investment. Acquiring Winn-Dixie would give Kroger immediate store count and presence in Florida, but many Winn-Dixie stores need significant improvements. I also doubt Kroger would be interested at Bi-Lo at this point.

[veteran+]

Using a specialty format to expand in Florida may be the most sound strategy. Let's face it, they would never be the market leader there. Buying Winn Dixie would not do it and there is just no way.

It is sure interesting how all of Kroger's initiatives concentrate away from the west coast. They also announced they will open/build 10 new Ruler Foods (all in the midwest). They aren't doing much of anything in CA at all. OR/WA are also pretty quiet other than some really expensive remodels and maybe one new Fred Meyer somewhere. At least AZ and UT are getting some action with a good number of new stores.

Kroger is missing out on a lot of opportunities by not building new stores in parts of Oregon (such as Southern Oregon; very fast growing) and by not having more new stores in California. I question their commitment to California long term.

Not to get political, but I anticipate one of the reasons for Kroger's lack on West Coast investment is due to the increased minimum wage in many cities/states in that part of the country. Kroger is likely operating in a "wait and see" mode to gauge how increased payroll will affect their store performance and bottom line. Other companies with a high concentration of low-wage workers are doing the same thing.

I don't think the minimum wage thing is germane with Kroger in California. My connections there are non plussed about it.

[veteran+]

Three possibilities of Kroger further expanding into Florida:
1. Expand the Kroger banner into Florida with Kroger and Kroger Marketplace stores. NOT LIKELY
2. Expand the Harris Teeter banner across Florida.MORE LIKELY ON A SMALL SCALE
3. Acquire Winn-Dixie.NOT LIKELY

I wouldn't discount the notion of investing in a specialty retailer as the vehicle for expanding in Florida, however. The new Luckys Market stores being built are being funded by Kroger's investment.

Opening Kroger, Kroger Marketplace, and Harris Teeter stores organically will obviously require significant investment. Acquiring Winn-Dixie would give Kroger immediate store count and presence in Florida, but many Winn-Dixie stores need significant improvements. I also doubt Kroger would be interested at Bi-Lo at this point.

Florida retail grocery is an odd market. Publix has been allowed to become so dominant that I wonder if ANY traditional supermarket company will ever have a chance to compete effectively. Even with low income neighborhoods they prosper. Winn Dixie has drifted so far away from their core customer base, trying on different suits that just do not fit. I wonder if that name can be repaired. Winn Dixie should have perfected their market paradigm by now which was and still is, low to middle income blue collar workers (which has gone through some changes). The should be the low price leader (a bit more than Walmart) with a not so fancy store with departments that reflect the needs of the neighborhood and also offer traditional supermarket service (unlike Walmart's zero service).

That is a demographic that is not being served in Florida and these customers are being forced to shop at Publix.

The more dominant Publix is in an area (like Dade County) the more Publix drifts away from their famous reputation. Funny how that works

[klkla]

Not to get political, but I anticipate one of the reasons for Kroger's lack on West Coast investment is due to the increased minimum wage in many cities/states in that part of the country. Kroger is likely operating in a "wait and see" mode to gauge how increased payroll will affect their store performance and bottom line. Other companies with a high concentration of low-wage workers are doing the same thing.

The increased minimum wage is a good thing for Kroger (Ralphs/Food4Less) , not a bad thing. It forces stores with lower labor costs to bring their wages closer to what Kroger is paying as a union shop and eliminates their main cost advantage.

Also, Kroger is still spending a lot of capital on stores here and remodels more frequently than competitors. They're not building huge stores here because their simply isn't quality real estate that could be bought for a reasonable price.

Kroger's situation in California has seen Ralphs stores slough off in the last 10+ years. Back in the early 2000s, Ralphs (along with Cala/Bell and Food 4 Less) numbered 400, and even between 2012 and 2013, it lost 9 stores (source), more than any other division (the only areas that had gains were areas where Harris Teeter were. It's also the only area I know of (with Kroger's pre-Mariano's/Harris Teeter acquisitons) that DOES NOT have a full-line "Marketplace" thing going on.

While Kroger HAS been known to pull out of areas before (most of Louisiana in the mid-1980s, San Antonio in the early 1990s), I don't think it's realistic to expect Kroger to pull out of California any time soon. I can see them at most spinning Ralphs off as an independent with a 30% interest share and an option to buy back the company.

Ralphs isn't going anyplace. They have the best real estate portfolio of any of Kroger's operating divisions and is very profitable. Sure, they have been closing marginal stores but they're also remodeling the good stores and running very high volume stores in the older wealthier areas.

[storewanderer]

I am beginning to wonder when Ralphs will stop closing stores. Will they settle for 100-150 high volume stores in wealthier neighborhoods and just let it be at that? I really think they missed some good opportunities skipping on Haggen; some of those would have made great Ralphs, especially on the central coast.

[klkla]

I am beginning to wonder when Ralphs will stop closing stores. Will they settle for 100-150 high volume stores in wealthier neighborhoods and just let it be at that? I really think they missed some good opportunities skipping on Haggen; some of those would have made great Ralphs, especially on the central coast.

I was surprised they didn't want any Haggen locations, as well. With so many new entrants in the market they are probably just taking a wait and see position and let everything shake out before making and changes to strategy .

[Knight]

Florida retail grocery is an odd market. Publix has been allowed to become so dominant that I wonder if ANY traditional supermarket company will ever have a chance to compete effectively. Even with low income neighborhoods they prosper. Winn Dixie has drifted so far away from their core customer base, trying on different suits that just do not fit. I wonder if that name can be repaired. Winn Dixie should have perfected their market paradigm by now which was and still is, low to middle income blue collar workers (which has gone through some changes). The should be the low price leader (a bit more than Walmart) with a not so fancy store with departments that reflect the needs of the neighborhood and also offer traditional supermarket service (unlike Walmart's zero service).

That is a demographic that is not being served in Florida and these customers are being forced to shop at Publix.

I am afraid both Winn-Dixie and Bi-Lo are beyond repair. Publix has obliterated or is obliterating them, and taken on their customer bases. It would take either Albertson's or Kroger to bring needed supermarket competition into Florida. Who has the initiative to open additional stores?

[veteran+]

Florida retail grocery is an odd market. Publix has been allowed to become so dominant that I wonder if ANY traditional supermarket company will ever have a chance to compete effectively. Even with low income neighborhoods they prosper. Winn Dixie has drifted so far away from their core customer base, trying on different suits that just do not fit. I wonder if that name can be repaired. Winn Dixie should have perfected their market paradigm by now which was and still is, low to middle income blue collar workers (which has gone through some changes). The should be the low price leader (a bit more than Walmart) with a not so fancy store with departments that reflect the needs of the neighborhood and also offer traditional supermarket service (unlike Walmart's zero service).

That is a demographic that is not being served in Florida and these customers are being forced to shop at Publix.

I am afraid both Winn-Dixie and Bi-Lo are beyond repair. Publix has obliterated or is obliterating them, and taken on their customer bases. It would take either Albertson's or Kroger to bring needed supermarket competition into Florida. Who has the initiative to open additional stores?

Good question!!!

The companies that "could" are not doing anything substantively.

There was a time that Florida had all the powerhouse grocers there plus independents.

[pseudo3d]

Florida retail grocery is an odd market. Publix has been allowed to become so dominant that I wonder if ANY traditional supermarket company will ever have a chance to compete effectively. Even with low income neighborhoods they prosper. Winn Dixie has drifted so far away from their core customer base, trying on different suits that just do not fit. I wonder if that name can be repaired. Winn Dixie should have perfected their market paradigm by now which was and still is, low to middle income blue collar workers (which has gone through some changes). The should be the low price leader (a bit more than Walmart) with a not so fancy store with departments that reflect the needs of the neighborhood and also offer traditional supermarket service (unlike Walmart's zero service).

That is a demographic that is not being served in Florida and these customers are being forced to shop at Publix.

I am afraid both Winn-Dixie and Bi-Lo are beyond repair. Publix has obliterated or is obliterating them, and taken on their customer bases. It would take either Albertson's or Kroger to bring needed supermarket competition into Florida. Who has the initiative to open additional stores?

Good question!!!

The companies that "could" are not doing anything substantively.

There was a time that Florida had all the powerhouse grocers there plus independents.

Gee, what's left in terms of traditional grocers? Publix is there and is more concentrated than frozen orange juice, Winn-Dixie is there but still fairly moribund (despite their new remodel and "Down Down" campaign), and while Albertsons and Kroger are renovating their few stores there (yes, Kroger is going to substantially expand their lone HT), they're doing nothing else. With regionals like Bruno's and Delchamps no more, and others too far away to make a difference, there's not much for Florida beyond any homegrown independents. Then again, Mariano's did sprout up locally from virtually nothing (even it was a part of Roundy's), and before selling to Kroger made quite a difference in the market share and the Chicago grocery scene as well.