Ralphs Arcadia Closing, Asian market to take place?

[CalItalian]

Another Ralphs closing to add to the list...and rather abruptly. Closing on May 20th, 2016.
http://www.pasadenastarnews.com/busines ... -its-doors

This area has been inundated with Chinese nationals buying homes (not unlike Vancouver, BC).

[J-Man]

That store used to be a Hughes market, and it's located in front of the May Company store that eventually became (ironically) Vons headquarters office.

Ralphs seems to be continuing its abandonment of the San Gabriel Valley, as the article indicates. There is another Ralphs in Arcadia on Foothill Blvd. but going east from that store along the 210 corridor, they've closed stores in Arcadia (Duarte Rd.), Duarte, Glendora, and San Dimas. Arcadia became a Savers thrift store, San Dimas and Duarte are Smart & Final Extras, and Glendora (a former very large Smiths) sits empty.

[klkla]

I was always amused by this store because it was on the same block as Vons corporate office. Was never a particularly high volume store, either.

I'm not 100% sure but I think this was one of the Hughes stores purchased by Ralphs.

(Edit: J-Man beat me too it)

[pseudo3d]

All this seems rather unusual for Kroger. You sure they aren't ready to do something with Ralphs, like spin it off or divest it?

I'm sure this isn't a reflection on Kroger's finances, but you never see a company continually close stores in a division unless they're in sort of financial trouble or choosing to part with it. With several closure announcements, I'm not buying the "they're just sloughing off marginal stores" considering Ralphs has been part of Kroger since '99 and in other divisions, and usually these are compensated/counteracted with the opening of new stores. I mean, sure, Ralphs has some fantastic stores, but then again, don't they all?

EDIT: The Vons office has been vacant for a number of months now (unless someone took it)...it was consolidated with the Fullerton Albertsons HQ and the building appeared on a real estate website with floorplans.

[storewanderer]

This is how Ralphs has been doing business for years, especially since the strike. Ralphs had close to 400 stores at its height (including NorCal and Cala/Bell, excluding F4L/FoodsCo). They are steadily closing stores. This is what they did in NorCal too, every now and then a store or two would be in the process of being closed. Eventually it was all closed.

It is obviously clear this Ralphs operation has not experienced the same success other Kroger divisions have been experiencing. Or let's put it this way, the rest of Kroger has been doing so well the past 10-15 years that the ongoing store closure activity and obvious marketshare losses at Ralphs have been "masked" by successes elsewhere.

Remember Ralphs was "assembled" by Burkle through a lot of beat down Alpha Betas/Boys, the original Ralphs which were largely pretty good stores, the 30 or so NorCal Cala/Bell/FoodsCo Stores which were very small very outdated operations, and then under Fred Meyer the bid for assets in NorCal involved the purchase by Kroger (which they were bound to when buying Fred Meyer, I often wonder if Kroger would have agreed to buy these stores) of a group of mid sized but B and C-location former Albertsons and a few former Luckys. Kroger also spent a ton of money in Ralphs in the early 2000's building new stores in places like Palm Springs area (still open), Fresno/Bakersfield (5 new stores built, 2 still open as Save Mart), NorCal (3 new stores built, 2 now Nugget 1 now Raleys), and doing 20-30 major remodels in NorCal moving departments and everything (stores now all closed and about half did not reopen as other grocers).

Kroger also took a pretty large goodwill write down and as I recall had some accounting issues related to Ralphs fairly early on in the 2000's. The problems at Ralphs are ongoing and fairly common knowledge. But you'd never know they were in trouble by looking at a lot of their stores which are really good operations and high volume.

[veteran+]

This is how Ralphs has been doing business for years, especially since the strike. Ralphs had close to 400 stores at its height (including NorCal and Cala/Bell, excluding F4L/FoodsCo). They are steadily closing stores. This is what they did in NorCal too, every now and then a store or two would be in the process of being closed. Eventually it was all closed.

It is obviously clear this Ralphs operation has not experienced the same success other Kroger divisions have been experiencing. Or let's put it this way, the rest of Kroger has been doing so well the past 10-15 years that the ongoing store closure activity and obvious marketshare losses at Ralphs have been "masked" by successes elsewhere.

Remember Ralphs was "assembled" by Burkle through a lot of beat down Alpha Betas/Boys, the original Ralphs which were largely pretty good stores, the 30 or so NorCal Cala/Bell/FoodsCo Stores which were very small very outdated operations, and then under Fred Meyer the bid for assets in NorCal involved the purchase by Kroger (which they were bound to when buying Fred Meyer, I often wonder if Kroger would have agreed to buy these stores) of a group of mid sized but B and C-location former Albertsons and a few former Luckys. Kroger also spent a ton of money in Ralphs in the early 2000's building new stores in places like Palm Springs area (still open), Fresno/Bakersfield (5 new stores built, 2 still open as Save Mart), NorCal (3 new stores built, 2 now Nugget 1 now Raleys), and doing 20-30 major remodels in NorCal moving departments and everything (stores now all closed and about half did not reopen as other grocers).

Kroger also took a pretty large goodwill write down and as I recall had some accounting issues related to Ralphs fairly early on in the 2000's. The problems at Ralphs are ongoing and fairly common knowledge. But you'd never know they were in trouble by looking at a lot of their stores which are really good operations and high volume.

Yes, they have been doing this for quite a while and it is the reason why I left for Pavilions.

IMO, I do not believe Kroger is in anyway preparing to let Ralphs go. Ralphs was and is way more profitable than Vons or Albertsons. Ralph's average volume per store is also higher than Vons, Albertsons, Stater Bros. or any of the "traditional" supermarkets.

I believe they want only high volume, very efficient and cost effective in neighborhoods that have good demographics. They have built very cool urban stores in mixed use properties. All are high volume. I know of only one store that failed and it was across the street from the famous Beverly Center Mall on La Cienega Bl. in Los Angeles.

[CalItalian]

This is how Ralphs has been doing business for years, especially since the strike. Ralphs had close to 400 stores at its height (including NorCal and Cala/Bell, excluding F4L/FoodsCo). They are steadily closing stores. This is what they did in NorCal too, every now and then a store or two would be in the process of being closed. Eventually it was all closed.

It is obviously clear this Ralphs operation has not experienced the same success other Kroger divisions have been experiencing. Or let's put it this way, the rest of Kroger has been doing so well the past 10-15 years that the ongoing store closure activity and obvious marketshare losses at Ralphs have been "masked" by successes elsewhere.

Remember Ralphs was "assembled" by Burkle through a lot of beat down Alpha Betas/Boys, the original Ralphs which were largely pretty good stores, the 30 or so NorCal Cala/Bell/FoodsCo Stores which were very small very outdated operations, and then under Fred Meyer the bid for assets in NorCal involved the purchase by Kroger (which they were bound to when buying Fred Meyer, I often wonder if Kroger would have agreed to buy these stores) of a group of mid sized but B and C-location former Albertsons and a few former Luckys. Kroger also spent a ton of money in Ralphs in the early 2000's building new stores in places like Palm Springs area (still open), Fresno/Bakersfield (5 new stores built, 2 still open as Save Mart), NorCal (3 new stores built, 2 now Nugget 1 now Raleys), and doing 20-30 major remodels in NorCal moving departments and everything (stores now all closed and about half did not reopen as other grocers).

Kroger also took a pretty large goodwill write down and as I recall had some accounting issues related to Ralphs fairly early on in the 2000's. The problems at Ralphs are ongoing and fairly common knowledge. But you'd never know they were in trouble by looking at a lot of their stores which are really good operations and high volume.

Yes, they have been doing this for quite a while and it is the reason why I left for Pavilions.

IMO, I do not believe Kroger is in anyway preparing to let Ralphs go. Ralphs was and is way more profitable than Vons or Albertsons. Ralph's average volume per store is also higher than Vons, Albertsons, Stater Bros. or any of the "traditional" supermarkets.

I believe they want only high volume, very efficient and cost effective in neighborhoods that have good demographics. They have built very cool urban stores in mixed use properties. All are high volume. I know of only one store that failed and it was across the street from the famous Beverly Center Mall on La Cienega Bl. in Los Angeles.

In high income areas on the Westside/South Bay, I can only think of four Ralphs over the last few decades that have closed (I live in the area). Everything else is still open and are all very busy stores. The Ralphs in the Beverly Connection (which you mentioned). That was a great Ralphs, large but in a difficult center to park in (but still much better than the nearby Ralphs at the edge of Beverly Hills that was once a Hughes Market). The entire center was remodeled and the parking entrance dug down more than a story to straighten it out and give better traffic flow after they closed. There was another smaller Ralphs nearby across from the Farmer's Market/Grove. It's now a Whole Foods. I believe it was a Lucky for a while, too. There was once a Ralphs on the south side of Wilshire Blvd. just one block east of Barrington in West L.A. It was once a Market Basket (the original Ralphs Fresh Fare is down the street). Torn down and a highrise and now closed Pavilions was built. In the South Bay, most recently, a Ralphs Fresh Fare lost its lease in Hermosa Beach. The owner of the center wanted a Trader Joe's.

The biggest Ralphs remodel in recent years was Westwood Village completed last year where they nearly doubled the size of their store to 94K sq. ft. (taking over a closed Best Buy that was attached to the Ralphs, both being 1/2 of a former Macy's (Bullock's) second floor). Now the largest Ralphs in the chain and the pride and joy of the local Ralphs execs. This is the #1 Ralphs in sales volume and liquor volume. It's one of the top 10 Kroger stores in sales volume nationwide. This is their premiere store and you will every week see the "suits" in that location.

[klkla]

But you'd never know they were in trouble by looking at a lot of their stores which are really good operations and high volume.

That's because they're not in trouble. They've been letting go of marginal stores as their leases come up. That's all there is to it. Ralphs is in very good shape and has the best real estate portfolio and is the best managed chain in Southern California IMO.

There was another smaller Ralphs nearby across from the Farmer's Market/Grove. It's now a Whole Foods. I believe it was a Lucky for a while, too.

It was built by and opened as a Safeway in addition to the other operators you have mentioned.

[pseudo3d]

But you'd never know they were in trouble by looking at a lot of their stores which are really good operations and high volume.

That's because they're not in trouble. They've been letting go of marginal stores as their leases come up. That's all there is to it. Ralphs is in very good shape and has the best real estate portfolio and is the best managed chain in Southern California IMO.

Letting leases expire in marginal stores without new stores opening? Gosh, where have I heard that before?

The only other reason (not mutually exclusive) is if Ralphs is vastly overbuilt, which doesn't seem to be the case (or is it?).

Anyway, while Kroger isn't going to get rid of Ralphs anytime soon unless something dramatic happens to them, I think denying anything is wrong with Ralphs may be wrong as store closures continue.

[storewanderer]

The Ralphs that Kroger bought in the late 1990's was overbuilt around Los Angeles due to the piecemeal arrangement I described. I don't think they are overbuilt any longer. I also don't think there are so many growth opportunities in SoCal for conventional grocers. The market changed completely after that strike and the non-conventional operators have made huge inroads and continue to make huge inroads. How many new stores is Safeway/Albertsons opening down there?

I think part of it comes down to ROI too. Can they get better ROI building more stores at Ralphs or can they get better ROI building more stores in cheaper places? They threw a lot of money at Ralphs in the early 2000's and I don't think they got a good ROI on that... since most of the stores they invested in have been closed/assumed by other operators. I think as a result they are not wanting to make very bold moves with Ralphs. They got burned once.