Kroger to buy Roundy's for $800 million

[klkla]

If Kroger decided to change King Soopers, Fry's, QVC, and Ralphs over to the Kroger name, then that's not going to be a huge upset since those brands have more or less operating as Kroger stores anyway for a number of years now.

I would strongly disagree with you about this. All four of those brands are very well known and three of the four are market share leaders. It would be suicide for Kroger to change the names of these stores. And more importantly there wouldn't be any upside to doing this.

Ralphs has been in continuous business in SoCal since 1872. And unlike A&P, for example, still has many strong viable stores.

[storewanderer]

It is easy for people on the outside of situations to generalize and think "we can change all those wayward Smiths, and Ralphs to Kroger and people won't care so much. Heck, the stores already run ads, private labels, and have store interiors that are identical to a Kroger. We will even let them keep up some regional merchandising at the regional level and keep their unique bakery/deli programs. There is really no reason to change the name other than that we have a big ego or we want to run some national television ads. Oh and we can save a few cents on name badges and bags by not having to order things that say Smiths and Ralphs but just do big orders of those that say Kroger."

Each of those Kroger divisions has some real differences in culture and personality. Just going into the stores and seeing how the employees behave/interact varies between the divisions.

We could go on and on about the topic but I think the best question raised to this point is, what would the benefit be of rebannering stores to Kroger? At this point, how would it benefit the company? I don't think it would. It would just cost them money on signs and it may upset more than a few customers. Plus it is a sign of respect to those who built these chains before Kroger took ownership to keep the old names on the stores. The name on the building is symbolic, emotional, and psychological for many customers and (current and former) employees.

Kroger could largely go in and rebanner stores by installing a new sign out front and getting new uniforms/perimeter labels/bags today and not do anything else to operations, so it would be a less disruptive process than what is described in the next paragraph. But still, what is the point?

Back when Albertsons took Lucky over, remember, it was a very hasty rebranding. Those stores were still sitting with 100% Lucky/Sav-On private label on November 3, 1999 when they reopened as Albertsons and the old Lucky perimeter stuff was still 100% in the stores for the first few weeks of operations under the Albertsons name. Not all of the stores had even been converted over to Albertsons shelf tags; some were still using old Lucky tags and putting tape/stickers over the "rewards card" references on the tags. Albertsons ran aggressive ads the first month and though they had repriced most of the stores to some new radically higher pricing, the stores were still selling through Lucky items for quite a while (at least six months) after the takeover. It didn't matter that for the first few weeks the stores were still selling Lucky items, putting up that Albertsons banner and repricing resulted in sharp and immediate sales declines for most of the stores. The name change was a red light to customers- "something has changed here, what is going on?" The stores were in a chaos with remerchandising attempts, the loyalty card elimination, banners on buildings, trucks hastily painted over, etc. This caused people to take a real close look at things and they did not like it for whatever reason(s) and decided they would shop elsewhere. Maybe some customers already had a negative impression of Albertsons as it was never a well liked chain in California. But a big part of why that rebranding failed was how and when it was implemented. Lucky wasn't broken. It was in great shape. Albertsons was an also ran in California, didn't have real strong share and was never the one in prime locations.

[rwsandiego]

They were planning to convert Jewel to Albertsons. That would have taken place by 2001. Acme was to be converted in 2000 also. The plan was to have Albertsons as a single national grocery banner. I assure you the source I received that information from was very close to the situation. Of course after Lucky and the internal chaos that mess caused, those plans got shelved.

One would have thought the bad experiences with Smitty's in MO, Bruno's in TN, and Super One in IA would have made them pause before converting Lucky, let alone Jewel-Osco and Acme. (Shakes head)

Bad experiences? From what I've read, Smitty's-MO and Buttrey actually went over pretty smoothly. Des Moines I'm less sure on, probably was less of a backlash on names and formats then just Albertsons pouring capex into areas it really shouldn't have been in during the first place. (As for TN, that was Seessel's, which was bought from Bruno's and were sold off to Schnucks before any name changes took place)

Lucky, on the other hand, was such a widespread operation that by January 2000, about a third of the stores in the Albertsons chain originally were Lucky. That many stores were going to cause problems just on the sheer number converted alone, to say nothing of changing formats and everything else people liked about Lucky.

I knew that Buttrey went well. That's why I didn't mention them. Guessing it went well because Albertsons was known in that part of the country.

Albertsons bought 14 Bruno's stores in Nashville in the late 90's and then bnought Seessel's in Memphis. The Bruno's stores were re-branded, but the Seesel's weren't. Since Seesel's was a different situation, I didn't mention them. I still don't know why Seesel's failed under Albertsons. Interestingly, even after Schnuck's bought the stores and re-branded them they still were unsuccessful. Their Des Moines stores were shut down and the Missouri stores were sold to Price Chopper.

I wonder if their acquisitions failed because they did not understand their new markets and, in some cases, new competitors. It felt like they bought any and every chain they could in an effort to gain locations without determining whether their format would be successful. In Lucky's case, they failed due to good ol' corporate hubris.

[rwsandiego]

It is easy for people on the outside of situations to generalize and think "we can change all those wayward Smiths, and Ralphs to Kroger and people won't care so much. Heck, the stores already run ads, private labels, and have store interiors that are identical to a Kroger. We will even let them keep up some regional merchandising at the regional level and keep their unique bakery/deli programs. There is really no reason to change the name other than that we have a big ego or we want to run some national television ads. Oh and we can save a few cents on name badges and bags by not having to order things that say Smiths and Ralphs but just do big orders of those that say Kroger."

Each of those Kroger divisions has some real differences in culture and personality. Just going into the stores and seeing how the employees behave/interact varies between the divisions. ...

Sometimes, the vibe in two different markets in the same division can be different. In San Diego, Ralphs stores are generally very, vey nicely maintained and clean. Obviously well taken care of for years and years. In LA, not so much. Several look like they have been redecorated but not truly remodeled.

...Back when Albertsons took Lucky over, remember, it was a very hasty rebranding. Those stores were still sitting with 100% Lucky/Sav-On private label on November 3, 1999 when they reopened as Albertsons and the old Lucky perimeter stuff was still 100% in the stores for the first few weeks of operations under the Albertsons name. Not all of the stores had even been converted over to Albertsons shelf tags; some were still using old Lucky tags and putting tape/stickers over the "rewards card" references on the tags. Albertsons ran aggressive ads the first month and though they had repriced most of the stores to some new radically higher pricing, the stores were still selling through Lucky items for quite a while (at least six months) after the takeover. It didn't matter that for the first few weeks the stores were still selling Lucky items, putting up that Albertsons banner and repricing resulted in sharp and immediate sales declines for most of the stores. The name change was a red light to customers- "something has changed here, what is going on?" The stores were in a chaos with remerchandising attempts, the loyalty card elimination, banners on buildings, trucks hastily painted over, etc. This caused people to take a real close look at things and they did not like it for whatever reason(s) and decided they would shop elsewhere. Maybe some customers already had a negative impression of Albertsons as it was never a well liked chain in California. But a big part of why that rebranding failed was how and when it was implemented. Lucky wasn't broken. It was in great shape. Albertsons was an also ran in California, didn't have real strong share and was never the one in prime locations.

Agree 100%. I moved to San Diego 10 months after the rebranding and there was still Lucky merchandise on the shelves and, of course, the stores had the Lucky decor for another decade after the re-branding. Albertsons had very few stores down here and customers were not happy that Lucky went away. Customers still called the neighborhood Albertsons "Lucky."

When Jewel, in a display of their own corporate hubris, rebranded Sav-on to OSCO they realized their mistake and put them back to Sav-on. Smart move.

[arizonaguy]

If Kroger decided to change King Soopers, Fry's, QVC, and Ralphs over to the Kroger name, then that's not going to be a huge upset since those brands have more or less operating as Kroger stores anyway for a number of years now.

I would strongly disagree with you about this. All four of those brands are very well known and three of the four are market share leaders. It would be suicide for Kroger to change the names of these stores. And more importantly there wouldn't be any upside to doing this.

Ralphs has been in continuous business in SoCal since 1872. And unlike A&P, for example, still has many strong viable stores.

If Kroger was going to rebanner Fry's, they should've done it in 1999 - 2000 when they rebannered the Smiths and Smitty's stores (about 50% of the combined stores) to Fry's.

Obviously, that ship has sailed. However, Arizona is a very transient state and I highly doubt sales would drop if the stores were re-bannered as Kroger. The Osco Drugs here all became rebannered as CVS and their sales don't seem to have suffered.

[veteran+]

If Kroger decided to change King Soopers, Fry's, QVC, and Ralphs over to the Kroger name, then that's not going to be a huge upset since those brands have more or less operating as Kroger stores anyway for a number of years now. Mariano's is a higher-end operation than Jewel and wouldn't generally fit the Kroger name (even the nicer stores, as in some divisions, Kroger exists and thrives in the nicest neighborhoods). Converting Mariano's to Kroger at this point would be a disaster.

Not even close.

The reason Kroger DOESN'T change the names is not because of how the stores 'operate like' Kroger. They do have some Kroger operations, but there are some regional differences. Changing the names on these stores would kill those divisions.

Going to have to go with you on this one

Having worked for both King Soopers and Ralphs I can attest to the similarities and differences of both and the reasons for it.

[veteran+]

It is easy for people on the outside of situations to generalize and think "we can change all those wayward Smiths, and Ralphs to Kroger and people won't care so much. Heck, the stores already run ads, private labels, and have store interiors that are identical to a Kroger. We will even let them keep up some regional merchandising at the regional level and keep their unique bakery/deli programs. There is really no reason to change the name other than that we have a big ego or we want to run some national television ads. Oh and we can save a few cents on name badges and bags by not having to order things that say Smiths and Ralphs but just do big orders of those that say Kroger."

Each of those Kroger divisions has some real differences in culture and personality. Just going into the stores and seeing how the employees behave/interact varies between the divisions. ...

Sometimes, the vibe in two different markets in the same division can be different. In San Diego, Ralphs stores are generally very, vey nicely maintained and clean. Obviously well taken care of for years and years. In LA, not so much. Several look like they have been redecorated but not truly remodeled.

That is spot on!!!

San Diego Ralphs feels like a totally different company than Los Angeles Ralphs.

Side note:

Publix in Dade County (with a few exceptions in very upscale neighborhoods) is not the same as Publix in other parts of the State or in other States. Most of the stores in Dade County feel like a different company with much lower standards and different employee attitudes.

[klkla]

Sometimes, the vibe in two different markets in the same division can be different. In San Diego, Ralphs stores are generally very, vey nicely maintained and clean. Obviously well taken care of for years and years. In LA, not so much. Several look like they have been redecorated but not truly remodeled.

True. In that case it's probably because Ralphs entered LA in 1872 and San Diego in 1982. A lot of the stores in San Diego are newer.

[pseudo3d]

Obviously, I don't really think Kroger (or Albertsons) should go around making mass rebrands; in fact, with the shrinking of Safeway, A&P, and frankly Kroger to an extent, I don't think national grocery brands are "in" anymore and companies would rather have many brands than one brand.

That being said since Roundy's is not a separate subsidiary like Harris Teeter (I don't think?) I can see Mariano's become like any other Kroger division, obviously with some regional differences but otherwise like it with a similar merchandise mix and décor. It definitely be rebranded as anything else (not sure about Pick n Save).

[rwsandiego]

Sometimes, the vibe in two different markets in the same division can be different. In San Diego, Ralphs stores are generally very, vey nicely maintained and clean. Obviously well taken care of for years and years. In LA, not so much. Several look like they have been redecorated but not truly remodeled.

True. In that case it's probably because Ralphs entered LA in 1872 and San Diego in 1982. A lot of the stores in San Diego are newer.

Yes, but even the older SD Ralphs feel like they have been well-maintained. LA, not so much. The local Jewel I shopped at in Chicago (well, Evanston) was built sometime in the 1950's and expanded once in the 1970's. Last time I was there (a year ago during a record heat and humidity wave) the store did not feel in the least bit old or dingy.

...That being said since Roundy's is not a separate subsidiary like Harris Teeter (I don't think?)...

The Roundy's banner websites read "(C) 2016 Roundy's Inc." According to the 2015 Kroger Fact Book, Roundy's is listed as an operating division. However, Ralph's, Smith's, Dillons, and others are listed as such and are not distinct operations, as is Harris-Teeter and, presumably, Roundy's (at least for right now).

I can see Mariano's become like any other Kroger division, obviously with some regional differences but otherwise like it with a similar merchandise mix and décor.[/quote]

That would not necessarily be a bad thing. Their meat, dairy, and center store isn't anything to write home about. The Roundy's brands feel low-end in comparison to Kroger brands. If Kroger were to cut perimeter expenses to make the chain profitable (or perhaps more profitable) customers might notice a dip at first, but better to see a slight dip in fanciness than the bankruptcy of the entire chain. Given Roundy's performance as an independent company, it was only a matter of time before the company became another corporate casualty.

My vote is Copp's, Metro Market, and Pick 'n Save will become the same as Ralph's, Dillon's, and Kroger.