Kroger closing 2 stores in Peoria, IL

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Kroger closing 2 stores in Peoria, IL

Post by storewanderer »

Appears both are in not so great areas and haven't had capital in a while but this is still a curious move. Why now?
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Re: Kroger closing 2 stores in Peoria, IL

Post by wnetmacman »

Looks like Kroger is cutting the fat now. Several peripheral stores are being cut this time. Peoria is a peripheral market, and though they aren't cutting the whole market, it appears they are cutting marginal stores. These stores would most likely be out of the Indianapolis division, which means they bypass other, non-Kroger towns to supply.
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Re: Kroger closing 2 stores in Peoria, IL

Post by architect »

wnetmacman wrote: January 9th, 2018, 1:32 pm Looks like Kroger is cutting the fat now. Several peripheral stores are being cut this time. Peoria is a peripheral market, and though they aren't cutting the whole market, it appears they are cutting marginal stores. These stores would most likely be out of the Indianapolis division, which means they bypass other, non-Kroger towns to supply.
Kroger also recently announced they are closing three stores served out of Memphis (two in the city and one in rural Mississippi) for the same reason, along with a store in Brownwood, Texas. All of these stores are in areas which are economically stagnant, and show little economic growth potential and therefore little opportunity to turn around financial performance. The fact that all of these stores were due for substantial upkeep didn't held their cause either. Expect to see a pattern of these closures over the coming years as most job growth is now concentrated in major cities plus college towns and towns with a strong, stable employer (such as Bentonville). The casualties will continue to pile up in small, isolated towns along with economically depressed cities such as Memphis, Detroit, Cleveland and St. Louis, particularly for full-line traditional grocers which can't afford the labor costs which these traditional stores demand despite their reduced revenue.
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Re: Kroger closing 2 stores in Peoria, IL

Post by pseudo3d »

wnetmacman wrote: January 9th, 2018, 1:32 pm Looks like Kroger is cutting the fat now. Several peripheral stores are being cut this time. Peoria is a peripheral market, and though they aren't cutting the whole market, it appears they are cutting marginal stores. These stores would most likely be out of the Indianapolis division, which means they bypass other, non-Kroger towns to supply.
The Central Division still services an even farther out store in Rolla, MO (branded as Kroger and operated by Kroger despite Dillon's territory), and that seems to be still open.

http://ir.kroger.com/Cache/1500100492.P ... id=4004136
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Re: Kroger closing 2 stores in Peoria, IL

Post by storewanderer »

Central Division isn't very great and I can see how they may be having some problems in some markets. Remember they are also the division that Hilander was under and that got the ax, those were extremely low volume operations however, I suspect Rockford and Peoria have some similarities. I was in their MO Stores a couple years ago and they were thoroughly unimpressive. Rolla was lousy and I was surprised how poorly executed its perimeter was. I thought I was in a Food Lion or Save Mart it was so bad. The other two, one was a very average type Kroger Superstore, the other was a very small very old store.

It does seem like Kroger divisions frequently overlap. Smiths and Fred Meyer overlap in Southern Idaho. There seems to also be a good lot of overlap in KY.
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Re: Kroger closing 2 stores in Peoria, IL

Post by pseudo3d »

storewanderer wrote: January 9th, 2018, 9:29 pm It does seem like Kroger divisions frequently overlap. Smiths and Fred Meyer overlap in Southern Idaho. There seems to also be a good lot of overlap in KY.
Assuming we're both looking at the 2017 Kroger Factbook, a lot of the Kentucky stores are overlap between JayC and Louisville. JayC is a different beast than the rest of the Kroger chain, as they operate small stores (even non-Ruler) in rural areas. I don't even think JayC has any stores that go beyond 40,000 square feet, and certainly not anything remotely close to Marketplace. Smith's and Fred Meyer are also different. There doesn't seem to be a market where the two directly overlap, and like with JayC/Ruler and Kroger Nashville, they're two different formats.
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Re: Kroger closing 2 stores in Peoria, IL

Post by Super S »

wnetmacman wrote: January 9th, 2018, 1:32 pm Looks like Kroger is cutting the fat now. Several peripheral stores are being cut this time. Peoria is a peripheral market, and though they aren't cutting the whole market, it appears they are cutting marginal stores. These stores would most likely be out of the Indianapolis division, which means they bypass other, non-Kroger towns to supply.
Kroger is cutting less profitable stores in other areas as well, such as the Fred Meyer at 82nd & Foster in Portland.
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Re: Kroger closing 2 stores in Peoria, IL

Post by storewanderer »

It appears they are getting rid of some of those "borderline neighborhood" stores. It is interesting that so many are going at the same time, across multiple divisions. This is the type of thing Safeway largely did 20-30 years ago and hasn't looked back. I am not sure trying to operate only in middle class and upper middle class suburbs did Safeway any favors as it allowed them to get boxed into a single marketing plan and high pricing plan and merchandising plan that seemed to cause them to bleed volume big time to competitors.

I always considered Kroger's willingness to operate in these areas as a plus in the sense that they are reaching a more broad customer base this way, and perhaps in some ways helping neighborhoods that otherwise would not have a legitimate grocery store. But this is a business, not a charity, so I understand the need to close unprofitable stores. It is still unfortunate for various involved.
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Re: Kroger closing 2 stores in Peoria, IL

Post by pseudo3d »

storewanderer wrote: January 10th, 2018, 8:39 pm It appears they are getting rid of some of those "borderline neighborhood" stores. It is interesting that so many are going at the same time, across multiple divisions. This is the type of thing Safeway largely did 20-30 years ago and hasn't looked back. I am not sure trying to operate only in middle class and upper middle class suburbs did Safeway any favors as it allowed them to get boxed into a single marketing plan and high pricing plan and merchandising plan that seemed to cause them to bleed volume big time to competitors.

I always considered Kroger's willingness to operate in these areas as a plus in the sense that they are reaching a more broad customer base this way, and perhaps in some ways helping neighborhoods that otherwise would not have a legitimate grocery store. But this is a business, not a charity, so I understand the need to close unprofitable stores. It is still unfortunate for various involved.
It does seem like Kroger is becoming sort of like Safeway in many aspects (in a bad way) including a fairly high-priced center store...had to return some olive oil because it was almost twice as expensive (like $3-4 difference) as H-E-B's (which tends to run cheaper, but not to extremes). Still, it's not a total wash--Safeway's big problem was going into market areas where they had no real business being in and then decided to remake the stores in their own image, end up making stores in transitional areas unviable, then throwing up their hands when the store they acquired becomes burning wreckage with only a small sliver of the market share they originally had. I'm sure that Kroger isn't going to go to those extremes but I think what's going on with Kroger is interesting to watch.

Now, I can't speak for other divisions, but Kroger appears to still run a number of old stores in Houston despite closing several in the last past decade have sloughed off, many quietly, though the store at 1990 Old Spanish Trail did not go as such. Remaining "old" stores include 4000 Polk, Gessner/Hammerly (another "transition" neighborhood), and a few others. I think H-E-B's extreme flexibility in stores (even if you discount "Joe V's Smart Shop" in more low-end areas) is what helped make them what they are today.
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Re: Kroger closing 2 stores in Peoria, IL

Post by storewanderer »

Kroger is starting to remind me in a lot of ways of Albertsons 2004 (the focus of technology and the unreasonable demands being placed on store level to execute poorly tested or poorly thought out programs) and also of the old centralized Safeway. Kroger has really changed the past couple of years. And not for the better. And their financial results show it.

Flexibility is key in the grocery business to reaching the most customers. And every store is a learning experience that makes you better. Start to pick and choose what you learn and you end up like Safeway, or like a politician in the DC inner circle (on either side). Of course when you surround yourself with narrow views that are like you, you will think you are doing the right thing and how can anyone possibly disagree? But when you open your eyes and look more broadly, there is an endless amount to learn from and consider to broaden your views. That is what operating stores in challenging neighborhoods does. And challenging neighborhoods span across all demographic levels.
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