Kroger Rumored to buy Whole Foods?

[mbz321]

What does everyone think of this?
http://www.investors.com/news/whole-foo ... D=ref_fark

[Alpha8472]

This is bad for consumers as the big chains keep getting bigger and independent chains are slowly disappearing. Whole Foods is the chain that many people shop at to get away from Kroger, Albertsons, Safeway, etc. Whole Foods was a powerful independent chain that could stand up to Kroger. Now that appeal will be gone. Will Kroger change the look and feel of Whole Foods and make it go down in quality? Will Kroger consolidate Whole Foods with one of its other chains? Will Harris Teeter be absorbed into Whole Foods which has better nationwide recognition?

What about divesting stores? Will Kroger be forced to divest or will the government simply look the other way once again?

[storewanderer]

Whenever stores appear to be having trouble or may be "on the block" it seems Kroger gets named as a potential buyer.

I think Whole Foods valuation is still high enough that Kroger will not be buying it out.

I have had some pretty bad experiences at Whole Foods in recent months on product quality, customer service, and store conditions. I am not sure what has happened there but it is clear the company is having trouble hitting its numbers and is cutting some corners in the stores as a result. Things like sellling rotten product in bakery, expired milk in dairy, multiple aggressive panhandlers in the parking lot, constant scanning errors... never had any issues like this in 5+ years of shopping in that store but the past couple months I've had all of the above, some multiple times.

In my opinion, Whole Foods would be best served going private. That way they can focus on taking care of their business rather than trying to please a never satisfied enough Wall Street. I believe Whole Foods has a very strong brand and great expansion potential as it stands. It is also a brand that younger customers seem to like. I can't say that for the conventional formats.

Kroger is big enough and needs to focus on what it has. They do not need any more formats. There is ample expansion potential for their current formats, notably the Marketplace format. There is also ample expansion potential in various markets where they have 3rd or 4th or 5th place share and go against weak or poorly run competitors. I think Kroger's hands are already full.

[pseudo3d]

They're just not meant for each other.

Kroger has spent a lot of money trying to push its own low-cost organic brand, Simple Truth, and has succeeded to an extent. There's no way that they can effectively mash that in with WFM.

Market share is a wash...it's just too far removed from a format from Kroger where either brand can be effectively used to replace each other, and they don't overlap in a number of a markets anyway.

They risk blowing an investment when they could be using it for expansion of their existing markets.

[veteran+]

Whenever stores appear to be having trouble or may be "on the block" it seems Kroger gets named as a potential buyer.

I think Whole Foods valuation is still high enough that Kroger will not be buying it out.

I have had some pretty bad experiences at Whole Foods in recent months on product quality, customer service, and store conditions. I am not sure what has happened there but it is clear the company is having trouble hitting its numbers and is cutting some corners in the stores as a result. Things like sellling rotten product in bakery, expired milk in dairy, multiple aggressive panhandlers in the parking lot, constant scanning errors... never had any issues like this in 5+ years of shopping in that store but the past couple months I've had all of the above, some multiple times.

In my opinion, Whole Foods would be best served going private. That way they can focus on taking care of their business rather than trying to please a never satisfied enough Wall Street. I believe Whole Foods has a very strong brand and great expansion potential as it stands. It is also a brand that younger customers seem to like. I can't say that for the conventional formats.

Kroger is big enough and needs to focus on what it has. They do not need any more formats. There is ample expansion potential for their current formats, notably the Marketplace format. There is also ample expansion potential in various markets where they have 3rd or 4th or 5th place share and go against weak or poorly run competitors. I think Kroger's hands are already full.

Agreed! They should go private and I have been saying that for a long time. The genius and flexibility of the company is being bogged down by Wall Street (inclusive of its shareholders and board of directors).

Thankfully, I have not yet experience any problems at the stores I have visited in 6 States.

[klkla]

I have had some pretty bad experiences at Whole Foods in recent months on product quality, customer service, and store conditions. I am not sure what has happened there but it is clear the company is having trouble hitting its numbers and is cutting some corners in the stores as a result.

In my opinion, Whole Foods would be best served going private.

My experiences have been similar. They opened a store near me in Downtown LA a year or so ago and I thought I would be a regular but was underwhelmed. Their meat department doesn't start setting up until around 11-11:30 am and by the time they're set up the store is packed with traffic and there is never any parking. I have to go after 8:00 PM to deal with the parking issue and by then the meat department is closed. The store doesn't have a spice section !?!?!?!

I also agree that going private would be the best option. They could dump the 365 experiment and focus on doing what they do best: Whole Paycheck stores geared towards wealthy Prius drivers.

[storewanderer]

I am also concerned what will happen if/when Kroger stops posting the good financials they've been posting for the past decade. Being publicly traded, it will be very interesting to see how that impacts the customer shopping experience.

It is clear to me that pressures from Wall Street (and increased competition) have really hurt Whole Foods.

I just see some strange things go on at the Reno Whole Foods. For example I was there one afternoon as they unloaded a pallet of apples from Apple Hill which is just a couple hours away so certainly about as local as apples can get here (very small galas direct from one of the growers) and immediately stuck a sign on the apples that said SALE! locally grown conventional Gala Apples .99/pound regular 1.99/pound. These were really small apples more lemon sized, no sticker, no wax, etc. I bought a few, good quality, of course. I returned a few days later, the same pallet was on the sidewalk, and I am sure the same apples, but a new sign, which said Organic locally grown Gala Apples 2.99/pound.

I also used to like going to this store for lunch as you could usually find some sort of hot pork (pulled pork shoulder usually but it was tasty), or hot beef (often brisket), but during most of the summer when I would go at lunch the entire hot bar was void of any meat options other than some really weird Paelo asian fried meat chunks and sometimes some tasteless broken up roasted chicken pieces. But there are endless hot plates full of rice, vegetables including popular and good under the heat lamp (not) things like broccoli or brussel sprouts. At $8.99/lb they really need to do better than this. Their salad bar doesn't even have any Parmesan to make a proper Caesar salad. The other thing I noticed was they cut the size of the comp water cups (they have an ice and water dispenser at the front of the store) from 8 ounces to 6 ounces. Also, if you buy hot coffee/iced tea from their coffee bar despite both items being self serve, if you dine in, they do not offer free refills like any other dine in restaurant would. Previously refills were 50 cents which was nominal (same price as Starbucks). I noticed last time the refill price is now $1. I finally gave up on this place for lunch which was really hard to do because it was a great option and I liked going to walk through the store at the same time.

[pseudo3d]

I am also concerned what will happen if/when Kroger stops posting the good financials they've been posting for the past decade. Being publicly traded, it will be very interesting to see how that impacts the customer shopping experience.

I'm sure that if Kroger was to go down (by itself and not some sort of wider catastrophe), it would be subtle at first. Less hot delis, more "B-grade stores", less staffing. If things went REALLY bad, then they'll pull the plug on a few markets (though I can't tell you what markets they would be forced out of).

[storewanderer]

"Bad" is relative. I am referring to if they stop posting sales growth and Wall Street starts pressuring them. How will Kroger react? Will they be happy being a cash cow with stagnant same store sales, focus on more organic expansion to grow overall sales, or what?

Or will they take the Safeway or Albertsons of the 1990's approach when sales soften and start to increase prices more and more to cover up sales losses and keep profit numbers strong?

I hope Kroger is smart enough to be a happy cash cow, even if Wall Street isn't fully happy if and when the same store sales numbers soften, the customers at Kroger are happy.

I hope Kroger has been growing sales for enough years that there is a culture in the company that is focused on sales, and there will be pushback from lower levels if things like scaled back perimeters, price increases, and other moves that will hurt foot traffic start to take place to shore up the numbers for Wall Street.

The other thing about Whole Foods is how could Kroger grow sales at Whole Foods? Lower the prices? Really, Whole Foods prices aren't that bad, for what they sell, they are generally competitive with other stores selling the same items (cheaper than Safeway in NorCal on dairy and non perishables).

[klkla]

Kroger is just playing it safe due to current political situation and the uncertainty that the election may bring. A lot of companies are doing the same thing. Using the money for a stock buyback instead of capital expenditures make sense when you're not sure what effect the election will have on the economy.,